1080iBeVuMin said:
Hey rifjim4069, nice post as always. But just as I see you ask other posters where they get their information, I must ask you the same thing... How did you come up with the number of subscribers at 1.5 to 2 million as breakeven point? Sounds reasonable enough, but I am wondering if you base that on anything. Thanks.
I am glad you called Voom a niche market provider. A lot of people criticize Voom as if they would criticize Lexus for not selling more cars than Toyota. Well, Voom is a premium service -- should be higher quality (get those PQ and stb issues fixed) and higher priced, and should be profitable at a lower subscriber base. D* and E* are the economy cars in this business. Not comparable to Voom.
It's speculation, however...it's largely based on facts and figures published in CableVision. I figured 1.5-2 million over the summer loosly based on information posted in CableVision's initial Sec Form 10 Filing back in May and subsequent filings throughout the summer (Aug) to include subscriber acquisition data and posted churn rates at that time. I don't recall the details...and VOOM doesn't come right out and post average subscriber acquisition costs, but I recall using a $600 per subscriber acquisition cost based on their posted subscribers costs of 16.4M and 28K subscribers. Of course, I noticed VOOM didn't include administration and general operating expenses due to new marketing campaign (19M) which could easily be added, which would bring the average subscriber costs well over $1000...but I used $600. I also recall using a churn rate of under 2% per month. At the time of the first filing, VOOM's churn rate was 21% for the first 6 months and later peaked in excess of 30% in late summer. To place this into perspective, E* had something like a 1.5% monthly churn rate last year and the average subscriber costs were around $450.
I also estimated subscriber revenue using VOOM Forum poll data of member Programming Packages (VOOM, VA VA VOOM, VOOM plus any number of Plus Packs) - I also used the $49, $89 and $19 pricing. Likewise, I pulled some of VOOM expenses out of my arse and/or did a rough estimate. There was nothing fancy about it, no accounting formulas nor standard deviations, just simple math to hopefully get me in the ballpark. Of course, if VOOM doesn't get a better handle on it's hardware costs, installation and maintenance costs and churn...there is no way in hell they will be able to competitively market their programming packages and turn a profit.
So to answer your question...I mostly pulled these figures out of my backside. :shocked CableVision/VOOM is free to correct me...and why they're at it, tell us when we'll see the DVR, Elliptical dish, MPEG-4, etc.
Just wanted to add...that WE, AMC and IFC were bundled with the Spin-off because they are money-maker and could fund a great deal of VOOMs general and administrative expenses to help keep them going for up for up to 24 months with other debt financing. It just occured to me that the terms and conditions of debt financing with BOA and their investers must have been pretty crappy; high interest rates and programming assets would be leveraged. Dolan could potentially lose Rainbow DBS and Rainbow Entertainment (programming assets) without a more reliable source of revenue. I just don't see Dolan placing himself in such a position.
