Thread: Satellite Updates and VOOM

Originally Posted by Scott Greczkowski

VOOM should have morphed what became HD demo channels down into a handfull of real HD channels with real schedules. A number of the channels could still be alive and thriving today if they would have done this instead they wanted to force everyone to carry all 15 of their channels. That ultimately was the real issue with VOOM that killed it.

I agree, but this was only the secondary reason that VOOM failed in my opinion. VOOM failed because of the horrible affiliation agreement that Dish Network signed with VOOM - they agreed to pay VOOM "super-premium" prices for HD in 2005, but by 2008 HD was no longer a premium service. In fact, according to the terms of the agreement DISH was supposed to be paying VOOM $5 per month for each and every HD customer (actually only 93% per the penetration requirement) by 2012, which is probably close to what DISH pays for the Starz or Showtime channels, and up to $6.43 per basic HD customer by 2019. With more than 11M estimated HD customer by the end of the contract (these esimates provided by VOOM), DISH would be paying VOOM roughly $70M per month or $840M per year to carry the VOOM HD channels. Yikes! Additionally, VOOM had no incentive to alter their 15-channel lineup (i.e., smaller programming bundles or a la carte) since DISH had already agreed to pay pay for all 15 HD channels for 15-years, and they would be required to offer similar terms to DISH. Needless to say, VOOM was not about to give-away their meal ticket.

In a nutshell...the Affiation Agreement killed VOOM and both parties were culpable since neither wanted to re-negotiate the agreement when HD no longer demanded premium prices (just look at what happened to HDNet and INHD). Again, I"m not sure if VOOM failed to meet their "spend requirement" or if DISH concocted reasons to legally or illegally terminate the affiliation agree. However, I can say that it makes no sense for VOOM not to meet their contractual obligations since DISH was their 15-year cash cow, and DISH had every reason to terminate the agreement...legally or illegally. Heck, under this agreement DISH ws required to pay VOOM potentially more than $800 million dollars in the final year of the contract. This is a programming expense that has a direct, long-term, impact on earnings whereas getting their arse handed to them in court, much like Tivo, would result in charges that do not impact earnings and, to be honest, in the long-run it is much, much, much cheaper than honoring the affiliation agreement.

- If anyone thinks that VOOM does not have a good shot of winning this case...they are not being objective.

- If anyone thinks that VOOM will be awarded billions should they prevail...they are probably incorrect.

- If anyone thinks that MonsterHD or any of the VOOM channels will reappear prior to this case concluding...this "ain't gonna happen" because it would serve to limit damages and support DISH's counterclaim that VOOM did not pursue other market opportunities.

- If anyone feels that VOOM will reappear as a 5, 10 or 15 channels lineup even if VOOM is awarded more than a billion dollars in this case...dream on! This is a money grab! We may see a MonstersHD or WorldSportHD some time in the future...but never VOOM HD.

In summary, VOOM is dead due to the "pseudo-exclusive" affiliation agreement, both business partners (that's what they were) not wanting to renegotiate the terms of the agrement or strategy to move the VOOM product forward, and the "money grab" to prove damages. It's now up to a judge and/or jury to decide who is telling the truth, who is legally correct, and assess liability and damages if warranted.