Shares in Cablevision jumped more than ten per cent on news that EchoStar Communications will purchase its Rainbow satellite for $200 million.

The news that Cablevision was to exit the satellite business came as a relief to investors and analysts who had been critical of the lack of penetration achieved by the Voom high-definition television service, which had only 26,000 subscribers.

It followed a meeting of Cablevision directors that pitched James L Dolan, who wanted to sell the business, against his father, the founder and controlling shareholder, Charles F Dolan.

EchoStar, on the other hand, may have picked up something of a bargain, gaining a satellite already in orbit for a knock-down price compared to the cost of building and launching a new one. As part of the deal, EchoStar will also acquire ground facilities and related assets.

The Rainbox 1 direct broadcast satellite is at 61.5 degrees West, an orbit that coincides with that of the EchoStar III satellite, and comes with the rights to broadcast on eleven frequencies at that location.

EchoStar says it is assessing how the Rainbow satellite can best be utilized to enhance its existing DISH Network service.