Current News Stories
Posted March 31, 2003 at 11:13 p.m.
EBay says PayPal didn't violate law, acted in good faith
From USA Today
WASHINGTON (AP) — EBay (EBAY) said Monday that federal prosecutors are claiming the company's PayPal operation violated a part of the USA Patriot Act that deals with transmission of funds connected to criminal activity, according to its annual report filed with the Securities and Exchange Commission.
As a result, PayPal might have to forfeit the amounts it received in connection with online gambling activities, and it also might be subject to criminal liability, the filing said.
EBay said Monday the U.S. attorney's office for the Eastern District of Missouri offered a complete settlement of all possible claims and charges covering a purported amount of earnings plus interest that PayPal derived from online gambling merchants from October 26, 2001, to July 31, 2002. The filing didn't provide information on the amount of earnings claimed in the letter.
EBay, which is based in San Jose, Calif., said PayPal acted in good faith and believes that it didn't violate the USA Patriot Act. The company said PayPal calculated that the amount of its earnings from online gaming activities was less than what was asserted in the U.S. attorney's letter.
In October, Internet auctioneer EBay completed its $1.4 billion acquisition of PayPal, giving it control of a top player in the Internet-payments market.
EBay said it would be harmed by negative publicity, costs of litigation and the diversion of management time if the investigation were to lead to a civil or criminal charge.
The company also said any finding of a civil or criminal violation, or potentially any settlement, could hurt PayPal's ability to obtain, maintain or renew money transmitter licenses in jurisdictions where such licenses are required, which would materially harm eBay's business.
Beginning in July 2002, PayPal provided documents and information related to its services to online gambling merchants, in response to a federal grand jury subpoena issued at the request of the U.S. attorney for the Eastern District of Missouri.
Posted March 25, 2003 at 5:26 a.m.
More Rumors on DirecTV Sale
From SkyReport
More speculation surfaced on News Corp.'s bid to acquire DirecTV, this time coming from British sources.
The Observer newspaper reported that the media giant was poised to make a $7 billion bid for Hughes Electronics and DirecTV as early as this week. The news sent News Corp.'s stock down more than 6 percent to $25.25.
The Observer also reported over the weekend that News Corp. Chairman Rupert Murdoch was expected to set up a new company - partly owned by Liberty Media and controlled by News Corp.'s Fox Entertainment Group - to take control of DirecTV.
The news follows money moves made by News Corp. and Liberty last week. News Corp. announced a $1.5 billion, 20-year bond issue while Liberty said it's planning to offer $1.75 billion in 20-year senior debentures convertible into AOL Time Warner shares.
Posted March 25, 2003 at 5:26 a.m.
DirecTV Discloses HD Info
from SkyReport
DirecTV recently responded to inquiries from the Federal Communications Commission concerning its high-definition TV efforts, including an assessment of the number of HD set-top boxes deployed and how the high-def business is going for the satellite TV service.
In a letter detailing HD happenings, DirecTV told commission officials that it has 180,000 active subscribers with HD set-top boxes. The company also told the agency about 260,000 HD set-top boxes have been shipped.
DirecTV told the FCC that it anticipates rolling out 30,000 to 50,000 HD-DVR set-top boxes in 2003 and 2004, with the bulk of shipments in 2004. Actual volumes for the product, which allows for the digital recording of programming, will depend on consumer demand, DirecTV said.
DirecTV also commented on the use of ATSC tuners in HD set-top boxes. The company told FCC staff that its HD models can receive over-the-air ATSC broadcasts as effectively as other ATSC devices.
The follow-up letter came two weeks after DirecTV executives met with commission officials on issues concerning the delivery of local stations via satellite. Satellite interests have been eyeing efforts at the commission and on Capitol Hill concerning the Satellite Home Viewer Improvement Act, which is up for renewal in 2004.
DirecTV is not alone in its HD talk. In early February, EchoStar Chairman Charlie Ergen met with FCC commissioners to discuss concerns with a requirement that would force satellite operators to carry local broadcast signals in high-definition. According to a FCC filing, Ergen also discussed the possibility of requiring delivery of locals on a single-dish, as well as consolidation in the media marketplace.
Posted March 13, 2003 at 6:31 a.m.
Pirates Rile Canadian Air Space
From SkyReport
If you think the pirating problem is bad in this country...consider the plight of Canadian rescue groups who say the sheer volume of pirated satellite signals is causing "phantom air crashes" around the nation.
According to an article in The Edmonton Sun, signals from pirated Bell ExpressVu cards are suspected of causing interference which mimics aircraft distress signals. According to Capt. Jean Houde of the Joint Rescue Co-ordination Centre at CFB Trenton, the phantom signals began to appear in Montreal about 16 months ago. Now they're showing up in Edmonton and Vancouver as well and are heard about once a day in all three cities.
Bell ExpressVu says its looking into the situation.
Posted March 13, 2003 at 6:30 a.m.
DirecTV Approaches FCC on Local TV, HD Issues
From SkyReport
In February, representatives with DirecTV met with Federal Communications Commission staff concerning issues associated with continuing carriage of local TV signals, including local HDTV.
In a presentation filed at the FCC, the company said mandating digital must-carry with format and multi-casting obligations - known as full ATSC must-carry - "would dramatically limit DirecTV's ability to continue providing local channel service in the markets where such service is currently offered." DirecTV added that if full ATSC must-carry becomes mandatory, it could deliver local TV service only to one average-sized market.
DirecTV also said in its FCC presentation that HDTV's bandwidth consumption may result in the reduction or elimination of satellite-delivered local TV service if mandatory carriage requires full HD broadcast signal coverage. While digital standard-definition TV typically allows 12 channels per satellite transponder, high-definition would significantly reduce the number of channels allowed on each transponder, the company said.
"HD bandwidth consumption effectively undermines the ability of DBS to provide satellite-delivered local channels on a wide-scale basis," DirecTV said in its presentation.
The comments and meetings at the FCC come on the heels of a debate at the FCC concerning carriage of local HD signals. The effort also is tied to growing efforts at the commission and on Capitol Hill concerning the Satellite Home Viewer Improvement Act, which is up for renewal in 2004.
Posted March 13, 2003 at 6:30 a.m.
Charlie Chases Cable, DirecTV's NFL Deal
From SkyReport
EchoStar Chairman Charlie Ergen spent Wednesday's financial conference held in Denver by Janco Partners taking aim at cable efforts to upgrade to new services and products, including Comcast and its billion-dollar acquisition of AT&T Broadband.
In one instance reported by analysts at the conference, Ergen scrutinized Comcast's $400 million investment to upgrade systems in the San Francisco area that cover 1.6 million subscribers. He said that if he had that money, it would've been used to build two satellites that serve 8 million subscribers and can cover 100 percent of U.S. television households.
He then left it to the audience to decide which investment was the best decision.
Ergen also went after DBS competitor DirecTV and its NFL Sunday Ticket deal. He said the sports package would have a negative financial impact, adding that NFL now stands for "no funds left."
In other notes from the conference, EchoStar execs talked about an affordable HD television, with a possible target price of $999. No firm plans have been made on when or if the HD/satellite TV combo would be offered. The HD set was unveiled by the company during January's CES show in Las Vegas.
And the company touted its future EchoStar IX satellite, a hybrid Ka/Ku-Band spacecraft can can offer 320 more channels, 60 local markets, 60 HD offerings, or a combination of all those offerings.
Posted March 10, 2003 at 2:43 a.m.
DirecTV May Drop ABC Family from Lineup
From SkyReport
DirecTV is notifying its customers that it may drop ABC Family from its programming lineup at the end of the month.
In a crawl televised to customers, DirecTV said its agreement to carry ABC Family expires March 31. If a new agreement is not reached by that day, ABC Family will no longer be available on the satellite TV service, the crawl said.
The contractual dispute with Disney/ABC concerning ABC Family centers on a 35 percent rate increase proposed for the service, Michael Thornton, DirecTV senior vice president of programming, said. "We decided that in this time of controlling costs," agreeing to the rate increase wasn't a good idea, he said.
The current one-year contract DirecTV has for ABC Family also included a fairly large increase, Thornton said. Discussions between the sides have been going on for a couple of months, and will continue during the next few weeks, he added.
In response, Eric Hollreiser, spokesperson for ABC Cable Networks, said, "We are surprised and disappointed that DirecTV has chosen to threaten their viewers with the loss of ABC Family at this early stage of our negotiations with them. ABC Family brings tremendous value to viewers and has only grown in viewership, quality and value since Disney acquired it.
"We will continue to work hard to reach an agreement with DirecTV to ensure that viewers will continue to enjoy ABC Family's great programs on an uninterrupted basis," Hollreiser added.
The skirmish involving ABC Family doesn't impact other Disney-controlled networks, such as Disney Channel, Toon Disney and the ESPN slate of networks.
Posted March 5, 2003 at 6:32 a.m.
DISH 4Q: Subs Up, Post-Merger Talk and No Insurance
EchoStar's fourth quarter results included a large increase in subscribers, thoughts on what happened with the company's failed merger with Hughes/DirecTV, and details about the lack of insurance for its satellite fleet.
During the fourth quarter, EchoStar's DISH Network added 400,000 net new subscribers. DISH Network had approximately 8.18 million subscribers as of Dec. 31.
The company's net loss for the fourth quarter totaled $716 million, compared to a net loss of $43 million reported during the corresponding period in 2001. The net loss includes charges of $690 million related to the termination of the company's failed merger with Hughes Electronics.
Fourth quarter revenue totaled $1.32 billion, a 15 percent increase when compared to $1.15 billion for the same period in 2001. Pre-marketing cash flow grew 27 percent to $548 million during the quarter.
During a conference call, EchoStar CEO Charlie Ergen took personal blame for the failed merger between EchoStar and Hughes, which controls DBS rival DirecTV. "We took a $600 million bet," he said, "and it cost all of our shareholders."
Ergen also said that in the future EchoStar may have a broadband offering that's economical, competitive with other offerings, and offers an effective solution for rural areas. Ergen also said HDTV will become an advantage for satellite, despite plans from cable to deliver more localized HD feeds. Satellite can deliver national HD feeds more effectively than cable, and local HD for satellite viewers can come from an off-air antenna, he said.
In its Securities and Exchange Commission filing detailing the quarter and 2002, EchoStar said insurance for its eight satellites has expired, and that it can't obtain coverage for the birds on acceptable terms. As a result, the company is self-insuring the satellite fleet, the filing said.
Posted March 4, 2003 at 7:16 a.m.
DirecTV Comments on Digital Copyright Issues
From SkyReport
DirecTV, in a filing detailing its thoughts on digital copyright protection issues, told the Federal Communications Commission that the agency should take a high-profile role in facilitating a dialogue on protecting digital content.
In comments sent to the agency last month, DirecTV said market-based solutions are key to protecting digital content, and should be considered before regulatory action. The satellite TV company also said all parties - equipment manufacturers, broadcasters, multichannel providers and content creators - need to cooperate should a digital copyright solution surfaces that doesn't require regulatory intervention.
If all that fails, "then government intervention may be necessary," the company said.
DirecTV urged the commission to "act as a powerful facilitator before asserting itself as a regulator," and "continue to take a high-profile role in moderating industry dialogue on standards-setting, technology implementation and compliance and enforcement issues."
In its comments, DirecTV also said any digital copyright protection regime should preserve fair-use expectations for consumers, including issues tied to the recording of digital TV content.
"DirecTV agrees that consumers are entitled to - and must - feel confident that a decision to make the leap to digital will not be a leap backward," the company said. "And consumers' expectations are that digital television will not only exceed their analog television experience in terms of picture quality, but also in terms of their ability to store, move, play back and otherwise interact with the content being transmitted."
Posted March 4, 2003 at 7:15 a.m.
Hughes Takes $23 Million Charge on AOL Breakup
From SkyReport
Hughes Electronics said it will take a $23 million pre-tax charge after terminating a strategic alliance it had with America Online.
In a Securities and Exchange Commission filing released Monday, Hughes said the new agreement will allow its Hughes Network Systems unit to continue providing Internet by satellite services to bundled AOL Broadband subscribers. That will give the companies a chance to transition affected subscribers to an unbundled service.
The agreement also included the termination of agreements related to AOL's purchase of Hughes securities. In January, AOL completed a sale of Hughes shares which it acquired in connection with the strategic alliance.
In addition, Hughes' DirecTV and HNS units and AOL agreed to explore new business relationships in the future, the SEC filing said.
The agreement terminating the strategic alliance is dated Feb. 24. The companies entered into the partnership in June 1999.
Posted February 25, 2003 at 5:56 a.m.
DirecTV Plans Additional Uplink Centers
from SkyReport
Later this year, DirecTV will open two new regional uplink centers to support its future satellite, DirecTV 7S.
The centers will be located in Oakdale, Minn., and Winchester, Va. The DirecTV 7S satellite is scheduled for launch sometime in the fourth quarter.
News about the uplink center additions came as DirecTV restructured some of its operations at its Castle Rock, Colo., uplink center, a move that includes staff reductions at the facility. Castle Rock will be responsible for the uplink of DirecTV's local TV signals.
In addition to the two future and Castle Rock facilities, DirecTV has an uplink facility in Los Angeles.
Posted February 24, 2003 at 1:14 a.m.
Tennessee Man Pleads Guilty in Piracy Case
from SkyReport
Federal authorities and satellite TV nabbed yet another pirate.
The U.S. Attorney's Office for the Middle District of Tennessee said J. Jason Tolleson, 30, of Smyrna, Tenn., entered a guilty plea in federal court last week to charges he conspired with others to commit mail fraud, and was involved in the manufacture and sale of unauthorized satellite TV decryption devices as well as structuring monetary transactions to avoid currency transaction reporting requirements.
U.S. Attorney James K. Vines said Tolleson faces up to five years imprisonment on each charge, a possible fine of as much as $6.9 million, restitution of up to $3.2 million, and the forfeiture of property with a value of as much as $3.2 million. The forfeitures include, among other things, his interest in a 2001 Porsche Boxster, a 1999 Malibu Response LX boat and boat trailer, and a residence in Smyrna. Tolleson also faces a possible period of supervised release of at least three years following his imprisonment, Vines said.
According to the U.S. Attorney's Office, Tolleson and several employees of JT Technology LLC manufactured or sold devices designed or intended to assist others in the unauthorized decryption of satellite TV programming without payment of subscription fees or pay-per-view fees to DirecTV. JT Technology received approximately $3.2 million from the sale of the devices between October 1999 and March 30, 2001, the Attorney's Office said.
Posted February 20, 2003 at 6:24 a.m.
XM's Panero: Satellite Exec of the Year
From SkyReport
Hugh Panero, president and CEO at XM Satellite Radio, was selected by the editors and analysts of PBI Media's satellite group as Via Satellite's Satellite Executive of the Year 2002.
As Satellite Executive of the Year, Panero will be featured in Via Satellite magazine's March 2003 issue. He also will present a luncheon address at PBI Media's annual international conference and exhibition, Satellite 2003, on Thursday, Feb. 27, in Washington, D.C. The conference runs Feb. 26-28 at the Washington Convention Center.
Under Panero's leadership, XM ended 2002 with more than 360,000 subscribers and roughly $475 million in new funding.
Posted February 20, 2003 at 6:23 a.m.
EchoStar Expands Local TV Slate
from SkyReport
EchoStar continues to add to its local TV slate, introducing packages for its customers in the Monterey/Salinas, Calif. area and in Lexington, Ky.
In Monterey/Salinas, EchoStar will offer four local channels: NBC-KSBW, CBS-KION, FOX-KCBA and PBS-KCAH. The Monterey local channel package will be offered at a $1 per month discount - to the regular $5.99 charge - until a distant ABC station is added to the offering, the company said.
In Lexington, DISH will offer these channels: ABC-WTVQ, CBS-WKYT, NBC-WLEX, FOX-WDKY and PBS-WKLE. A second dish, available free of charge, may be required to receive the PBS station, EchoStar said.
The EchoStar effort marks the first time both Monterey and Lexington have received local channels via satellite.
With Monterey and Lexington, DISH has local TV packages for 59 markets.
In addition to that news, EchoStar said it signed agreements with Gray Television and Cordillera Communications for carriage of their local TV stations in Lexington as well as Colorado Springs, Tucson and Omaha.
EchoStar's DISH Network launched local TV packages for Colorado Springs and Tucson last year and Omaha earlier this year, minus the Gray and Cordillera stations in the respective markets.
DISH Network will provide carriage of NBC-WOWT for customers in Omaha and CBS-KKTV in Colorado Springs, stations owned by Gray Television. Through its agreement with Cordillera, DISH Network will provide NBC-KVOA in Tucson and NBC-KOAA in Colorado Springs.
Posted February 18, 2003 at 5:49 a.m.
More States Consider Satellite Taxes
from SkyReport
More states are considering taxing satellite TV services in an effort to make up budget shortfalls.
In addition to cable/satellite TV tax proposals in Kentucky and Ohio, state lawmakers in Arizona, California, Connecticut, Nevada and Virginia are considering legislation that would - at the very least - tax DBS services. Andy Wright, president of the Satellite Broadcasting and Communications Association, sent letters to the governors of those states opposing the proposed taxes, the SBCA said in its Report from the President.
The SBCA is using the typical arguments to fight the proposed taxes: It's not fair or logical to increase the cost consumers pay for satellite TV, since it's a national service that does not enjoy a local monopoly, uses no local rights-of-way or services like cable, and doesn't burden the state or local infrastructure. Unless all multichannel providers - including cable operators and telephone service providers - are treated equally in the tax schemes, the tax proposals would be unconstitutional under the Commerce Clause of the U.S. Constitution, the SBCA said in its Report from the President.
The SBCA said it will continue to work with member companies and state lawmakers on future tax proposals.
Posted February 17, 2003 at 1:39 a.m.
PROGRAMMING: Outdoor Channel Goes to the Dogs
From SkyReport
Outdoor Channel Goes to the Dogs - The Outdoor Channel entered into an agreement with The Iditarod Trail Committee to become the official cable/satellite network of the 2003 Iditarod Trail Sled Dog Race, which begins March 1 in Anchorage, Alaska. The Outdoor Channel will produce and air nightly, 30-minute programs featuring the race, from the night before the competition begins until the day after the race’s finish some 10 to 12 days after the start.
DISH Offers Spanish-Language PPV - EchoStar's DISH Network will offer Spanish-language pay-per-view movies from around the globe on DISH On Demand Pay-Per-View, starting Saturday. Some of the upcoming titles include the Argentine films "The Son of the Bride," "Nine Queens," and the Mexican title "Y Tu Mama Tambien."
Sirius Has Grammys Covered - On Grammy night, Feb. 23, listeners tuning into Sirius stream 135 from 7 p.m. to 11 p.m. Eastern Time will hear up-to-the-minute coverage of the event, followed by a special live show from Sirius' national studios in the heart of New York City. Former MTV personality Ken Ober, along with Timbre Henning and comedian and musician Charles Zucker, will provide live awards coverage.
DirecTV Delivers NBA on HD - DirecTV said it will offer several NBA games in HD, beginning this weekend with the New York Knicks playing the Los Angeles Lakers. The HDTV game is Sunday, Feb. 16 at 9:30 p.m. Eastern Time. The remaining schedule of HDTV games will be announced at a later date.
Happy President's Day - Please note, due to the President's Day holiday, SkyREPORT won't deliver news Monday. The news resumes Tuesday, Feb. 18.
Posted February 17, 2003 at 1:38 a.m.
Sirius in Court with Sub Management Company
from SkyReport
Sirius is involved in litigation with its subscriber management system company in a case which both allege the other company isn't living up to their end of the deal.
The Richmond, Va., subscriber management firm, Sentraliant, alleged in U.S. District Court in Virginia that Sirius has failed to hold up its part of the contract, including paying for services. Sirius said Sentraliant's system is plagued with problems, even though the satellite radio company has paid Sentraliant more than $26 million for services.
In its court filing, Sirius said the Sentraliant system has several defects, including hampering its ability to bill and collect payments, track and report revenue, activate subscribers, manage customer accounts, and interact with electronics manufacturers, retailers, car companies and other partners selling the satellite radio offering.
Sirius said in its court documents that it put Sentraliant on notice in November of the alleged breaches in the contract, and moved to terminate the agreement. The company also said, "Sirius is entitled to a dismissal of the case because it was filed for the sole purpose of prolonging the duration of the contract under which Sentraliant cannot perform and the breaches of which it has not cured."
Sentraliant had no comment on the litigation due to confidentiality provisions.
The Sentraliant litigation said Sirius owes the company at least $156,000, and alleged that the satellite radio service has failed on several occasions to pay the money it owes. "Not only does Sirius refuse to pay, it further refuses even to say whether it plans to pay in the future," Sentraliant said in a court filing.
As for alleged defects in the subscriber management system, Sentraliant said, "Each and every purported deficiency either does not exist, has been remedied, is not material, or is the result of express directives from Sirius to Sentraliant not to work on certain items or Sirius’ failure to provide Sentraliant with its system requirements."
Sentraliant added that Sirius at times wouldn't permit the company to address alleged deficiencies. "For example, Sirius has failed to provide Sentraliant with certain requirements necessary to provide certain services to Sirius. Sirius personnel have not been reasonably available to respond to Sentraliant’s efforts to remedy the alleged deficiencies."
Posted February 17, 2003 at 1:37 a.m.
DirecTV Eyes Staff Reductions at Castle Rock
from SkyReport
DirecTV confirmed it's restructuring the operations of its broadcast centers in Castle Rock, Colo., and Los Angeles as part of an overall initiative to reduce costs, improve efficiencies within the company, and move toward more specialized, focused operations at the two centers.
The move will result in a reduction in staff at the Castle Rock center, DirecTV spokesperson Bob Marsocci said. "Castle Rock management is discussing the restructuring with employees and those employees whose positions are being eliminated will be notified on Saturday," he said.
There are about 150 employees at Castle Rock, and the staff reduction will affect less than half of those employees, Marsocci said.
Castle Rock is DirecTV's original broadcast center, and it will remain a vital part of the DirecTV broadcast service. "With the restructuring, Castle Rock will play the primary role in the transmission of local channel services and the future expansion of those services - a key initiative for DirecTV and its ability to remain a competitive multichannel video service," he said.
Posted February 11, 2003 at 10:44 a.m.
Analyst: Cablevision Could Sell DBS Assets
From SkyReport
Merrill Lynch analyst Jessica Reif Cohen on Monday raised her rating for Cablevision to a "buy," saying the MSO could report positive news for its high-speed cable modem business and may start moving on a sale of its satellite TV assets.
Reif Cohen, who hasn't been a fan of Cablevision's DBS aspirations, said in a research note that a delay in launching the first Cablevision satellite this year could provide the company with additional time to negotiate a sale of its DBS assets, possibly to EchoStar.
Given DirecTV’s effort to expand local TV offerings to more than 100 U.S. markets, EchoStar will need additional capacity to increase its local TV market coverage, Reif Cohen said. "Cablevision’s satellite is the solution and it is configurable with EchoStar’s system even after launch," she said.
She pegged the satellite’s worth at $350 million to $500 million in a private sale.
"It is clear that DBS operators will need additional capacity to handle the requirements of broadcast local signals and high definition television, putting a premium on Cablevision’s orbital slot," Reif Cohen said. "It is also clear that launching a third DBS service relying on a single bird is not feasible."
Posted February 11, 2003 at 10:42 a.m.
Fooling the FCC (Again)
from SkyReport
While FCC Chairman Michael K. Powell solemnly declares that the telcos' "Copper wire will end its life," the phone giants are squeezing mighty bandwidth - and mighty potential profits - from what Powell terms this "aging infrastructure."
But don't look for the telco guys to 'fess up in D.C. After all, Powell's reasoning is the basis for his proposed new rules which would greatly ease requirements on phone company "sharing" of their lines.
This past Friday in the Washington Post, writer Jonathan Krim noted that "advances in technology allow significantly faster connection speeds to be squeezed out of the country's 1.5 billion miles of existing copper lines." Said William L. Smith, chief technology officer of BellSouth Corp in an interview, " "I'm amazed and encouraged with what we can do with our copper network."
That doesn't come as a big surprise to the home satellite retailers and cable operators battling telco triple-play phone-video-Internet services in selected areas across the country. (Just check out our Jan. 20 SkyBOX: Bells Tolling in Rural America for more info on this.) But don't tell the FCC; it might burst that nice "we gotta do this for broadband's sake" bubble.
Posted February 11, 2003 at 10:41 a.m.
Street Eyes DirecTV's $2.95 Billion Debt
from SkyReport
DirecTV said Monday it intends to privately offer up to $1.4 billion in senior notes due 2013 as well as arrange $1.55 billion in new senior secured credit facilities.
DirecTV, controlled by Hughes Electronics, said it expects to raise the $2.95 billion in debt by early March.
The DirecTV debt announcement caught the eyes of Wall Street analysts, which continue to closely watch any future acquisition of the coveted satellite TV assets. William Kidd of Lehman Brothers said the move may be a precursor to the sale of General Motors' stake in Hughes, with the bulk of money for any purchase being pre-arranged at Hughes as opposed to being contingent on a buying company's ability to arrange bridge financing.
"We believe the move reflects GM's confidence that the sale of its block is now fairly timely. As an aside, the financing also allows GM to monetize a large portion of its stake through a repurchase, even if no deal is consummated for Hughes," Kidd said.
DirecTV said it plans to distribute to Hughes the net proceeds from the debt sale and the term loan portion of the credit facilities. The money will enable Hughes to repay outstanding debt under existing credit facilities, fund its business plan through projected cash flow breakeven and for other corporate purposes, the satellite TV company said.
Posted February 10, 2003 at 4:22 a.m.
SBC makes pitch for DirecTV 'triple play'
By Andrew Backover and David Lieberman, USA TODAY
SBC Communications, the USA's No. 2 local phone company, is in preliminary talks to acquire No. 1 satellite broadcaster DirecTV, a move that could shake up the cable, satellite and phone sectors, people familiar with the matter say.
DirecTV's parent, Hughes Electronics, has been the subject of sale talks since the beginning of the year, shortly after regulators blocked its $18 billion merger with satellite rival EchoStar. Auto giant General Motors, which controls Hughes, wants to sell the company to help fund its pension obligations. Casual discussions have occurred with entertainment partners, investment firms and phone companies such as SBC. Joseph Walker, the former co-head of mergers and acquisitions at J.P. Morgan Chase, has advised GM.
The talks are at a very early stage, and it's not clear if SBC is interested in all of Hughes or just DirecTV.
Another likely bidder is Rupert Murdoch's News Corp., which wants a U.S. presence to go with its satellite operations in Europe, Asia and Latin America. Murdoch lost out to EchoStar in the original bidding for DirecTV.
DirecTV would give SBC the ultimate package of services — TV, local and long-distance phone service, wireless and high-speed Internet service — to fend off cable companies in its 13-state territory. Cable providers that sell digital TV and broadband are also gearing up to sell phone service.
DirecTV would give SBC "a triple-play bundle — voice, video and data — to compete with what cable is about to become," says Ford Cavallari of consulting firm Adventis.
Beyond that, satellite could add revenue at a time when SBC is losing customers and phone lines to rivals, wireless carriers and the effects of a sluggish economy. While phone companies have flirted in the past with selling TV in a variety of ways, virtually all of those efforts fizzled. Even today, SBC has a marketing partnership with EchoStar to sell satellite TV to its customers. But such ventures are often less profitable than selling the service directly, analysts say.
DirecTV could also help SBC to expand beyond its home turf by selling phone and Internet services to DirecTV's 11 million customers. By gaining satellite customers in new markets, SBC might have a better shot at fulfilling its promise to regulators that it would compete in 30 markets outside its region. SBC's vow, made in anticipation of its 1999 acquisition of phone company Ameritech, remains mostly unmet because of various economic and competitive factors.
An SBC bid for DirecTV likely would face fewer regulatory and antitrust hurdles than if SBC tried to buy a phone company. While regulators are expected to be more open to communications and media consolidation in the future, they sank the EchoStar-DirecTV deal by deeming it anti-competitive.
SBC declined comment on possible talks. GM and Hughes spokespeople also declined comment, saying that GM is evaluating several options.
How an SBC-DirecTV merger would affect various sectors:
Phone. Rivals might have a harder time stealing SBC's local phone customers. Research shows that customer loyalty increases as consumers buy more services from one company. That could hurt long-distance carriers AT&T and WorldCom's MCI, which have aggressively marketed local phone service in a number of states. It could also hurt other regional phone companies if SBC uses satellite as a stepping stone for expansion.
Cable. Cable providers such as Comcast and Cox Communications might have to step up their plans to sell phone service. So far, cable firms have delayed big phone rollouts as they wait for cheaper technology and focus on selling digital TV and broadband services. But they, too, might have to find more complete bundles to compete with what SBC could offer.
Satellite. EchoStar, the USA's No. 2 satellite TV provider with its DISH network, might look for a phone partner of its own. It's unclear how EchoStar's marketing venture with SBC, announced in April, would be affected if SBC acquired DirecTV.
Posted February 10, 2003 at 1:03 a.m.
Report: SBC New Bidder for DirecTV
The New York Times reported Friday that regional phone company SBC Communications has entered into serious talks to acquire DirecTV in a deal that could be worth more than $10 billion.
The reported SBC talks are another wrinkle in News Corp.'s attempt to acquire the coveted satellite TV company. News Corp. lost out to EchoStar in its bid to get DirecTV, though EchoStar's effort was dropped after it ran into regulatory trouble in Washington, D.C.
The newspaper, quoting unnamed sources, also said Cablevision and General Electric have expressed interest in jointly acquiring DirecTV. However, the Times said GE and Cablevision are far less serious about DirecTV than SBC and News Corp.
The Times said General Motors, which controls DirecTV parent Hughes, approached SBC at the beginning of the year in an attempt to bring in another bidder to compete against News Corp. The publication also said SBC could soon begin due diligence of Hughes' records.
Posted February 6, 2003 at 2:09 a.m.
DirecTV Has NBA All-Star Game in HD
From SkyReport
DirecTV, striking back at cable's plans to carry NBA All-Star Game festivities in high-definition, said it also plans to offer the big game and related events in HD.
The weekend telecasts will be available on DirecTV channel 198 at no charge and will begin Saturday at 8 p.m. Eastern Time with NBA All-Star Saturday Night activities. NBA All-Star Game coverage begins Sunday at 8 p.m. Eastern Time with the event's opening ceremony.
The telecasts are available to customers who have an HDTV set with a built-in DirecTV receiver or a DirecTV-enabled high-definition set-top receiver, and a multi-satellite dish with three LNBs. HDTV sets integrated with the DirecTV receiver, DirecTV-enabled HD receivers and triple-LNB satellite dishes are available from authorized retailers nationwide.
In addition to DirecTV, Comcast has been promoting its carriage of NBA All-Star Game events in high-def all week.
Posted February 6, 2003 at 2:08 a.m.
Street Eyes DISH Locals Plan
from SkyReport
EchoStar's effort to add new cities to DISH Network's local TV slate - and how the work is a little different from small dish competitor DirecTV - has caught the attention of Wall Street.
Today, EchoStar rolls out local TV channels for its viewers in the Chico/Redding, Calif., market. DirecTV launched a local TV channel package for its customers in the Richmond, Va., area on Jan. 15, and took the wraps off its plans to offer local TV channels in an additional 50 markets by the end of 2003.
In its new local TV efforts, DirecTV has focused on larger markets: Richmond is listed as No. 59 in Neilsen's list of TV DMAs. EchoStar, however, has kept to smaller markets: Chico is No. 132 on the Nielsen DMA list; Cedar Rapids, No. 88; Omaha, No. 78; and Reno, No. 114.
Said Lehman Brothers satellite analyst William Kidd, "now that EchoStar and DirecTV have overlapping coverage on most of the top 50 markets, they are beginning to diverge in their choice of new local markets to target."
Kidd said he believes EchoStar "is intentionally choosing markets which may not necessarily be the 51st, 52nd or 53rd largest market" in order to maintain a competitive advantage over DirecTV in those specific cities.
Some have also suggested that EchoStar is targeting smaller cities with locals in order to take advantage of cable operators lacking digital TV or other services. However, others said EchoStar's smaller markets may fall under spot beams that also are delivering locals for nearby larger markets.
With the addition of Chico/Redding, DISH Network has local TV channel packages available in 57 markets.
Posted February 4, 2003 at 4:23 a.m.
New DISH Locals, New DirecTV Programming
from SkyReport
This week, EchoStar will reveal the next local TV package for DISH Network viewers. The market: Chico/Redding, Calif.
DISH Network viewers living in the Northern California market will get ABC affiliate KRCR, CBS station KHSL, FOX-KCVU, NBC-KNVN, and PBS KIXE.
EchoStar added two markets - Cedar Rapids, Iowa, and Omaha, Neb., - in January, both of which are smaller markets the company has been targeting in the past couple of months. With the addition of Chico/Redding, DISH Network will have local TV channel packages available in 57 markets.
In other programming news, DirecTV said it's partnering with TVB Satellite, a subsidiary of Hong Kong-based Chinese-language broadcaster TVB Group, to deliver Jadeworld, a programming package of five Chinese-language channels.
A DirecTV exclusive, Jadeworld will be available on an a la carte basis for $36.99 a month. The new programming package will be the second Chinese-language offering in the DirecTV lineup. The service also transmits the Phoenix North American Chinese Channel in Mandarin to its customers in the United States.
Posted February 3, 2003 at 4:26 a.m.
Strategy Analytics Predicts U.S. Broadband Homes Will Top 25 Million in 2003
from Satnews
Boston/Jan. 28, 2003/Satnews Daily/ — The number of US households using cable modems, DSL, or other broadband technologies to connect to the Internet will increase by more than 40 percent during 2003, according to a report just released by technology research and consulting firm Strategy Analytics.
The company's Global Forecast of Residential Broadband Internet Subscribers projects that the installed base of residential broadband subscribers in the United States will grow from 17.9 million homes today to 25.3 million homes by the end of this year. By the end of 2008, the total number of broadband subscribers will soar to 64 million, or 59 percent of all US homes.
"Despite the slow economy, consumer demand for broadband was remarkably strong in 2002, when the US market grew by more than six million subscribers," noted James Penhune, a director of the Strategy Analytics Global Broadband Practice. "Over the next five years, high-speed access will become the norm for residential Internet users as broadband becomes more widely available, more flexibly priced and a more powerful vehicle for new kinds of entertainment, content and services."
Today, only about 27 percent of all US Internet homes use broadband connections. By 2008, the report estimates that the percentage will have risen to more than 70 percent.
Cable modem service will continue to be the most widely used form of broadband access in the US. The forecast predicts that 16.1 million homes will use cable modems by the end of 2003, while about half that number (7.9 million homes) will use DSL connections. And another 1.3 million homes will get broadband through other, less established, technologies such as fixed-wireless services, two-way satellite links and fiber to the home.
US Residential Broadband Subscribers, 2002-2008
(millions)
2002 2003 2004 2005 2006 2007 2008
----------------------------------------------------
Cable Modem 11.1 16.1 21.8 27.8 33.1 37.2 40.3
DSL 6.2 7.9 9.1 10.1 11.4 13.1 15.6
Other 0.6 1.3 2.4 3.7 5.0 6.6 8.2
Total 17.9 25.3 33.3 41.6 49.5 56.9 64.1
Source: Strategy Analytics Global Broadband Practice, 2003
Other regions covered by the Strategy Analytics report include 16 European nations, Canada and Asia-Pacific.
Strategy Analytics, Inc., a global research and consulting firm, provides timely insights and strategic business solutions to companies operating at the convergence of information, communications and entertainment technologies.
Posted February 3, 2003 at 4:25 a.m.
AOL Time Warner Sells Stake in Hughes
from Satnews
New York/January 30, 2003/Satnews/ — AOL Time Warner Inc. sold its entire stake in satellite operator Hughes Electronics Corp, parent of -- DirecTV, Hughes Network Systems, and PanAmSat -- to help reduce its US$26 billion ($48.05 billion) debt load, Reuters has reported, quoting an AOL Time Warner spokesman.
Reuters said the spokesman declined to comment on the price or the bankers involved in the deal to sell the 8.4 per cent stake in Hughes, but said the sale took place late Tuesday. A Bank of America spokeswoman confirmed the transaction but declined to comment further.
According to the Wall Street Journal, AOL sold the stake in Hughes for around $800 million in a block trade to Bank of America, which is expected to resell the shares on the open market. Reports say the Hughes stake was offered on the open market at US$9.90 a share plus commission by Bank of America. Hughes shares closed on Tuesday at US$10.45.
With the sale, the battle between Rupert Murdoch and his US arch-rival Charlie Ergen to seize control of America's satellite TV market took another turn. The AOL Time Warner holdings is a key stake in Hughes Electronics, the satellite broadcaster both men have been pursuing. The sale, analysts say, removes an obstacle in the quest of Murdoch's News Corporation and Ergen's Echostar Communications to take control of Hughes, the parent company of DirecTV, the largest pay TV satellite broadcaster in the US.
News Corp. is predicted to eventually buy the stake to allow Murdoch to increase his leverage in his discussions with Hughes for the control of DirecTV.
There have been speculations that News Corp is nearing a joint bid with Liberty Media for DirecTV. Early last month, Liberty chief executive Robert Bennett said his company's history of relationships and transactions with News Corp. makes him reasonably optimistic that they will be able to work things out with News Corp.
US regulators forced Hughes late last year to abandon plans for an $US18 billion ($31.92 billion) merger with EchoStar, which runs the DISH satellite television network because of regulatory concerns. News Corp was considered the leading bidder for Hughes until EchoStar came up with a better offer in late 2001.
In December last year, News Corp. chairman Rupert Murdoch is quoted to have said he expects a 50:50 partnership with Malone's Liberty, which has promised financial backing in the first effort.
The most recent reports, however, have suggested Murdoch and Ergen are now discussing a joint bid for Hughes, although no deal appears imminent.
The sale of the AOL Time Warner stake at Hughes came afterthe company reported last week a loss of nearly $100 billion for 2002, the largest annual deficit in corporate history. More than a third of the loss is attributable to a drop of $33.5 billion in the value of America Online since the online company acquired Time Warner in January 2001.
Analysts say AOL will make other cash-raising moves, such as selling its book-publishing division and the Atlanta Braves, the baseball team Turner brought into the media empire.
Posted February 3, 2003 at 2:33 a.m.
New Date for MVDDS Auction
from SkyReport
It's another date change for auctions that will sell licenses for the controversial terrestrial wireless offering that aims to share DBS frequencies.
Late last week, the Federal Communications Commission said an auction for licenses in the developing Multichannel Video Distribution and Data Service (MVDDS) is scheduled to begin June 25. The MVDDS auction was originally scheduled to begin Feb. 12, then was delayed until Aug. 6.
In addition to the rescheduled June date, an FCC notice also asks for comment on the auction structure and procedure.
Satellite interests - including the Satellite Broadcasting and Communications Association, EchoStar and DirecTV - have been fighting the MVDDS proposal, worried that the spectrum-sharing wireless technology will interfere with satellite TV signals. SBCA has asked the FCC to reconsider the spectrum-sharing rules, and is pursuing a review of the FCC’s MVDDS decision in D.C. federal court.
Posted February 3, 2003 at 2:33 a.m.
DirecTV Approaches FCC on Two-Dish Locals
from SkyReport
In January, DirecTV approached officials at the Federal Communications Commission concerning EchoStar's use of two dishes to deliver a select set of local channels to its customers.
DirecTV brought up the two-dish issue during meetings with support staff for Democratic Commissioners Michael Copps and Jonathan Adelstein. At the meetings, DirecTV officials said they support past criticisms from FCC leaders that suggested the Media Bureau's decision to allow EchoStar to deliver a select set of local channels via a second dish is inconsistent with regulations.
Copps and Republican Commissioner Kevin Martin made those remarks on EchoStar's two-dish solution last spring.
DirecTV also pointed out to Copps and Adelstein that its satellite TV service provides local channels from a single full-CONUS slot, allowing its customers to receive local broadcasts with one dish.
Last spring, the National Association of Broadcasters and others asked the FCC to take action to address satellite carriage of certain local stations in a manner that requires subscribers to obtain a second satellite dish.
Posted February 3, 2003 at 2:32 a.m.
Satellite Strikes in Florida Dispute
from SkyReport
A programming carriage skirmish between Central Florida regional sports channel Sunshine Network and Advance Newhouse/Time Warner Cable may become a boost for satellite TV.
Via its Web site, Sunshine Network informed its viewers in the Tampa area that it has been battling the cable operator over carriage since it was dropped from the MSO's lineup on Dec. 31. "Those of us at Sunshine Network regret that Advance Newhouse/Time Warner Cable decided not to renew its agreement with Sunshine Network, but we must respect Advance Newhouse/Time Warner Cable's business decision," Sunshine Network said on its Web site.
Sunshine Network said it proposed renewal terms to Advance Newhouse/Time Warner Cable and many other cable operators throughout Florida prior to the start of the NBA and NHL seasons. Sunshine Network said it signed agreements with all of the other major cable operators in the state, except for Advance Newhouse/Time Warner Cable.
The Sunshine Network Web statement also said that it was proposed its programming become available to viewers as a "pay channel" similar to premium movie services. "We at Sunshine Network believe that this is not in the best interest of the fans – we believe that everyone should have access to their local teams as part of their basic cable or satellite service. In fact, this is the only way Sunshine Network is distributed throughout Florida," the network said.
In its defense, Advance Newhouse/Time Warner said Sunshine Network is demanding "an extreme rate increase" for carriage, possibly as much as a 60 percent jump in the first year and double-digit increases in subsequent years.
"As your cable provider, it is our responsibility to manage programming costs on behalf of all of our customers and provide the best options in cable programming at a fair price," the cable operator said. What the network is asking "would be paid by all our customers, not just those who watch the channel. No other cable network has asked for such an extreme increase in their fees," Advance Newhouse/Time Warner said in a letter to its customers.
Sunshine Network carries Tampa Bay Lightning hockey, Orlando Magic basketball, college sports and other local programming.
Satellite TV services have agreements with Sunshine Network. Advertising promoting DirecTV and EchoStar's DISH Network have appeared in local newspapers, focusing on the skirmish and promoting small dish delivery of Sunshine Network.
Posted January 30, 2003 at 2:21 a.m.
Report: Digital Cable at 39 Million in 2007
from SkyReport
The Yankee Group released a report, titled "Poised to Surpass DBS, Can Digital Cable Keep up the Pace?," that projects digital cable penetration will grow to 39 million homes by year-end 2007.
As a result of billions of dollars spent on cable system upgrades to better compete with satellite TV, digital cable adoption has been dramatic, reaching an estimated 18.9 million homes by the end of 2002, Yankee Group said. New services, such as video-on-demand, interactive and enhanced TV, personal video recorders, and high-definition TV, will drive digital cable growth over the next several years.
"To attain a high level of penetration cable operators must overcome three major market hurdles," said Aditya Kishore, Yankee Group Media and Entertainment analyst. "First, digital penetration is leveling off at 35 to 40 percent of subscribers. Second, high churn rates continue to plague the industry. Third, debt-burdened MSOs are under pressure to generate free cash flow, hampering their ability to rapidly conduct capital-intensive plant upgrades."
As a result of these hurdles, the Yankee Group estimated that digital cable growth slowed to about 4 million net additions in 2002, down from 5 million to 6 million net additions in each of the last two years.
Posted January 30, 2003 at 2:20 a.m.
Time Warner Cable Rolls Out VOD
from SkyReport
Time Warner Cable, AOL Time Warner's cable TV unit, said it has video-on-demand, subscription video-on-demand or both services in 32 of its 34 divisions as of year-end 2002.
Time Warner Cable added 984,000 net digital video subscribers during the fourth quarter, taking its total to 3.7 million, the company said Wednesday. As for high-speed Internet customers, Time Warner Cable added 1 million net subscribers, for a total of 2.6 million.
At the end of the year, digital video subscribers represented 34 percent of the basic cable subscriber base, while high-speed data subscribers represented 15 percent of eligible homes passed, the company said.
For 2002, Time Warner Cable's EBITDA rose 12 percent on revenues that increased 15 percent. Full-year subscription revenues grew 14 percent, driven by growth in high-speed data services, digital cable and basic cable subscribers and higher basic cable rates. Advertising and Commerce revenues increased 20 percent, due to increased sales and a rise in advertising purchased by programming vendors to promote their channels.
Posted January 30, 2003 at 2:20 a.m.
INTERNATIONAL: Canada Cable Goes High-Def
from SkyReport
Canada Cable Goes High-Def - Shaw Cablesystems launched its first HDTV channels for customers in Calgary and the Greater Vancouver region. Supported by the Shaw Digital Cable Terminal (DCT) 5100 HD, the offering debuted with the HD delivery of last weekend's Super Bowl.
DISH Delivers Cricket - EchoStar's DISH Network will deliver all 54 games of the Cricket World Cup, broadcasting live from South Africa beginning Saturday, Feb. 8, and ending Sunday, March 23. DISH Network customers can purchase the Cricket World Cup package for $299.95. In addition, EchoStar said it reached a sub-licensing agreement with the Caribbean Media Corporation for the re-broadcast of the 2003 Cricket World Cup across the Caribbean through television and radio outlets.
Gilat Wins African Contract - Gilat Satellite Networks said it will deploy several Nigerian two-way satellite data and voice communications networks, based on its FaraWay VSAT platform. The networks will be provided by Gilat's local partners, SEC and DCC, and include applications for major Nigerian banks and petroleum companies.
Posted January 30, 2003 at 2:19 a.m.
DISH Takes to the Skies with Song
from SkyReport
Song, Delta Airlines' latest effort at low-cost air travel, is working with EchoStar to deliver in-flight entertainment to passengers aboard the new air carrier.
Song is partnering with Matsushita Avionics Systems and EchoStar to deliver DISH Network satellite TV service to its planes. The service will include personal video monitors at every seat with "touch screen" technology.
In addition to satellite TV, the service includes pay-per-view programming available on demand, games, audio feeds that allow passengers to pick music, and connecting gate information broadcast directly to the in-seat video monitors.
EchoStar's partnership with Delta and Song follows DirecTV's effort with JetBlue and Frontier Airlines. Both of those air carriers use DirecTV's service to deliver programming to its customers.
Posted January 30, 2003 at 2:18 a.m.
Satellite radio shifts into high gear
By Earle Eldridge, USA TODAY
The USA's two satellite radio providers, which were struggling to hold on last fall, appear to have turned a corner toward survival. They've been helped by a slew of new vehicles that will offer factory-installed systems and by an infusion of new long-term financing.
XM hopes to connect 1 million subscribers to its satellite uplink by year's end.
XM Satellite Radio
By the end of the year, Sirius Satellite Radio and XM Satellite Radio will be offered as optional equipment in more than 100 new car models, more than double the number last year.
More important, both companies have secured financing that they say will keep them afloat until they expect to earn money or come close to it.
They each had been burning about $90 million a quarter. Neither has yet released fourth-quarter numbers.
"They are both funded well into the future," says Jimmy Schaeffler, a subscription service analyst with the Carmel Group. "A year from now their share value will have enhanced several times — at least double. They are starting to gain traction."
"We aren't out of the woods yet, but I can see the light," says Joseph Clayton, CEO of Sirius Satellite Radio.
"We are feeling real good about where we are," says Hugh Panero, CEO of XM.
Nationwide, ad-free
The services offer coast-to-coast, mostly commercial-free radio with everything from rap to opera, sports to children's programming. XM has 101 channels, Sirius 100 channels.
A monthly subscription to XM is $9.99; for Sirius, it's $12.95.
XM closed a $475 million refinancing program this week. It will let the company continue operating through the second half of 2004, when it expects to be profitable. XM, which has been on the air since December 2001, lost $110 million in the third quarter. Sirius earlier announced a $1.2 billion refinancing program to keep it running until the second quarter of 2004. It expects to be profitable by the first quarter of 2005. On the air since July 2002, Sirius lost $119 million in the third quarter.
XM, which currently has 360,000 subscribers, expects to have 1 million by year's end. Sirius has only 30,000 subscribers but expects 300,000 by the end of the year.
Subscribers can buy a stand-alone satellite radio that can be used at home or plugged into a car. More electronics manufacturers are offering such units.
But it's long been thought that the key to drawing millions of subscribers is to have satellite-capable radios installed in cars by manufacturers. And that is what's happening now.
Almost every automaker has announced plans to offer factory-installed satellite radios on at least some models this year. General Motors, the first automaker to offer in-car satellite radios, is expanding the option from 25 to 44 models this year.
Honda, Acura, Chrysler, Jeep, Dodge, BMW, Mercedes-Benz, Ford, Lincoln, Mercury, Volvo, Jaguar, Land Rover, Nissan and Infiniti brands also will offer satellite radio in at least some models.
As a factory-installed option, satellite radio can cost up to $400. Some automakers are offering to pay the monthly fee for the service for a limited time.
Stand-alone radios start at $200.
Both Sirius and XM also have cut deals with rental-car companies to offer the service, which may lure more subscribers who get a taste of satellite radio. Hertz will offer Sirius on several cars, minivans and sport-utility vehicles. Avis Rent A Car offers XM on several models.
Other challenges
Besides staying alive, the companies must battle each other for subscribers.
This may be especially challenging for Sirius because it charges a higher monthly fee. However, Sirius points out that it has more commercial-free choices than XM.
Schaeffler says the two companies also need to do more marketing to get on consumers' radar screens. "The bottom line is, it is a great product," he says. "It works pretty well, and it's a quantum leap above traditional radio."
Posted January 29, 2003 at 3:57 a.m.
Innocent Plea in DirecTV Piracy Case
from SkyReport
Igor Serebryany, the 19-year-old University of Chicago student accused of stealing details for DirecTV's new conditional access system and then distributing the information on the Internet, pleaded not guilty to the charges in Los Angeles federal court this week.
Serebryany, indicted by a federal grand jury earlier in the month on three felony counts of theft of trade secrets, faces 10 years in prison if convicted of the charges, according to reports. The student allegedly stole the information from a Los Angeles law firm which was doing legal work for DirecTV. At the time, he was working for an outside printing and copying service preparing paperwork for the law office on the satellite TV company's behalf.
The information taken reportedly deals with DirecTV's fourth-generation access system, known as the "P4" card. Earlier in the month, DirecTV officials said the security of its conditional access system was not compromised despite what happened with the stolen information.
Posted January 29, 2003 at 3:57 a.m.
Sirius and XM Work on Money Moves, Jackson Visits XM
from SkyReport
Sirius reported that it was serving 29,947 subscribers as of Dec. 31, six months after the satellite radio service took its offering nationwide.
The New York City-based company, in a Securities and Exchange Commission filing released Tuesday, reported the subscriber count along with details of its restructuring plan. Shareholders will be given a chance to vote on Sirius' restructuring and recapitalization proposals at a March 4 meeting.
In the filing, Sirius said the proposed restructuring will eliminate substantially all of its outstanding debt, and provide the company with sufficient cash to cover estimated funding needs into second quarter 2004. After the restructuring, Sirius said it can achieve break-even cash flow with further additional funding of about $75 million.
Also in the filing, Sirius said if it doesn't get its restructuring done, the company will go through an in-court restructuring under Chapter 11 bankruptcy.
Also on Tuesday, XM Satellite Radio said it closed on its $475 million funding package - consisting of $225 million in new funds from strategic and financial investors and $250 million in payment deferrals and related credit facilities from General Motors.
In other satellite radio news, the Rev. Jesse Jackson visited XM Tuesday, in an attempt to discuss carriage of religious network The Word, the National Association of Black Organizations and the company confirmed.
XM's Chance Patterson said the meeting Jackson had with XM CEO Hugh Panero was pleasant and lasted about a half-hour, and mostly consisted of the Civil Rights leader listening to presentations on XM's slate of religious programming as well as content aimed at African-American listeners. Jackson also was invited to participate in XM's Black History Month specials airing in February, Patterson said.
No pressure was ever placed on XM executives concerning carriage of The Word during the meeting, Patterson said. However, he added that XM has no plans to carry the religious network.
Groups such as the National Association of Black Organizations have been pressuring XM to carry The Word, with demonstrations and press announcements sent over the wires during the past six months.
Posted January 28, 2003 at 1:55 a.m.
NAB Attacks Cable on HDTV
from SkyReport
The National Association of Broadcasters alleged Monday that cable operators are blocking customer access to broadcast HDTV signals, and it used the Super Bowl to illustrate its complaint.
The association said viewers in 64 of 80 markets where local stations have converted to digital HDTV were unable to watch the Super Bowl on Sunday through their local cable system.
"It's disappointing that cable TV operators are continuing to block viewer access to digital and HDTV programming delivered by local broadcasters," said NAB President and CEO Edward Fritts. "One would think that cable operators would want to provide their customers with access to broadcast HDTV programming like the Super Bowl, which year in and year out is the country's most watched program."
The NAB complaints came after ABC partnered with top MSOs to deliver the big game to cable subscribers.
The NAB said ABC affiliates broadcasting HDTV cover 69 percent of U.S. households, but cable operators in markets that have access to an ABC HDTV signal deliver that feed to only 27 percent of TV households. Also, the association pointed to earlier findings that suggested cable operators are carrying fewer than 10 percent of the 700 local television stations that have made the transition to digital.
CableFAX Daily reported that the National Cable and Telecommunications Association found it regrettable that "many stations have rejected the guidance of FCC chairman Michael Powell so that cable could regularly offer ABC HD broadcasts without charging an additional fee."
The NCTA added, "Even more regrettable is the failure of other ABC stations, serving more than 30 percent of TV households, to offer any HDTV, months after an FCC deadline, so fans could view the game via an antenna. Instead, the free spectrum given to these broadcasters for digital spectaculars like the Super Bowl remains idle."
Posted January 28, 2003 at 1:55 a.m.
NRTC/Pegasus/DirecTV Trial Date Delayed
from SkyReport
The programming/sales litigation involving Pegasus, the National Rural Telecommunications Cooperative (NRTC) and DirecTV is being worked out before a mediator, and that effort has pushed back a trial date between the sides until the summer.
The trial date in the case was set for April 1. Due to the mediation, the trail date is now June 3, according to a Securities and Exchange Commission filing.
The court case is before the US District Court in Los Angeles.
The legal skirmish revolves around the rights NRTC and Pegasus have concerning sales of certain programming to subscribers in rural areas and other matters, including access to DirecTV satellites.
Posted January 28, 2003 at 1:54 a.m.
TECHNOLOGY: Starz Goes With PanAmSat
from SkyReport
Starz Goes With PanAmSat - Starz Encore Group and its sister-company, International Channel Networks, renewed satellite capacity on PanAmSat's Galaxy fleet. As part of the agreement, Starz Encore and International Channel Networks will continue to distribute programming on the Galaxy-IRR, Galaxy-VR and Galaxy XI satellites. The birds will support distribution of Starz Super Pak and International Channel programming to cable and satellite affiliates.
HNS Finishes Chip - Hughes Network Systems announced the development of the first 440 Mbps digital modem chip, which it said is a critical milestone for the development of DirecWAY terminals that will support the future Spaceway broadband satellite system. The ASIC chip, named "Maxwell" after the Scottish physicist and mathematician, is one of the key components that comprise the end user terminal. It will transmit and receive information to and from the satellite that yields the ability to switch on-board the satellite, thereby eliminating the requirement for an expensive ground hub switching point, the company said.
Orbital Wins Orders - Orbital Sciences received orders for four small space launch vehicles from the U.S. government. NASA contracted the company to launch its Spectroscopy and Photometry of the Intergalactic Medium's Diffuse Radiation satellite aboard a Pegasus rocket for a mission that will take place in 2005. And the Defense Department contracted the company for three Minotaur space launch vehicles through a program with the Air Force.
Posted January 23, 2003 at 4:45 a.m.
Pennsylvania Hackers Targeted by DirecTV
from skyreport
It does not pay to be a provider of hacked satellite TV access cards ... and it now may not be worth the trouble for viewers to obtain illegal satellite TV reception devices.
Last week, DirecTV filed lawsuits in U.S. District Court against 22 Pennsylvania individuals the company said were allegedly receiving the satellite TV service through illegitimate means.
The lawsuits targeting the viewers seek damages of $10,000 to $100,000 for each violation of the law. According to sources, the defendants were identified through records obtained in a search of several companies which allegedly sold reprogrammed access cards or equipment that can illegally intercept satellite TV signals.
DirecTV's Robert Mercer said the company has filed hundreds of legal actions against users of signal theft equipment during the past year.
The lawsuits follow litigation filed in federal court in June seeking damages against seven other Pennsylvania residents, alleging they had purchased pirated access cards.
Posted January 23, 2003 at 4:45 a.m.
A PanAmSat/HNS Combo?
from skyreport.com
Reports suggested that Hughes Electronics may be ready to combine its PanAmSat and Hughes Network Systems units, but the company later denied it's considering the move.
On Wednesday, the Wall Street Journal reported that Hughes executives were considering a plan that would put Hughes Network Systems, known for its DirecWAY and VSAT business, into PanAmSat, the commercial satellite operator 81-percent controlled by Hughes.
According to the paper, Hughes wanted to use PanAmSat's dependable cash flow to help fund fledgling businesses being developed by HNS, including next-generation satellite broadband system Spaceway. The plan also may have helped Hughes to maximize the selling price for its DirecTV business, according to industry officials quoted by the Journal.
Later in the day, Hughes dismissed the speculation. "No plan is being drafted to merge PanAmSat and Hughes Network Systems. However, Hughes is always reviewing its options," spokesman Richard Dore said.
Posted January 23, 2003 at 4:44 a.m.
Chrysler Delivering Sirius
from skyreport.com
Sirius is now available at all Chrysler, Dodge and Jeep dealerships across the continental United States in select 2003 and 2004 vehicles, DaimlerChrysler is announcing today.
The Chrysler Group is delivering Sirius as both a dealer and factory-installed feature. The satellite radio service will be offered on 16 different 2003 model-year vehicles as a Mopar dealer-installed offering.
Sirius will be available in the following Chrysler vehicles: PT Cruiser, Sebring Sedan and Convertible, 300M, Concorde, Voyager, Town and Country; Dodge: Stratus Sedan, Dakota, Durango, Ram, Intrepid, Neon, Caravan, Grand Caravan; and Jeep: Liberty and Grand Cherokee.
The suggested retail price will be $299 plus installation. The Sirius subscription is $12.95 a month. An activation fee of $15 will be waived for customers selecting the Mopar dealer-installed option.
Posted January 23, 2003 at 4:43 a.m.
Cablevision Bird Ready to Launch
from skyreport.com
The next launch for U.S. satellite TV could put a bird into orbit for a cable company.
Lockheed Martin and its Commercial Space Systems division said they are gearing up for the launch of a spacecraft for Cablevision and its Rainbow DBS endeavor. The satellite's future parking spot at 61.5 degrees, a DBS orbital location the cable operator shares with EchoStar, were once part of last-minute discussions surrounding the failed merger between EchoStar and DirecTV.
Lockheed Martin said the high-power A2100 satellite built for Cablevision/Rainbow DBS is scheduled to launch in the first half of the year aboard an Atlas V rocket. According to the launch forecast on Space.com, the Atlas rocket is expected to carry Rainbow-1 from Cape Canaveral Air Force Station on May 8.
Cablevision spokesperson Charlie Schueler said the company plans to go ahead with its DBS business, "but at this time we don't have much more to report."
The Cablevision satellite and its 61.5-degree DBS spectrum were part of last-minute discussions between the MSO, EchoStar and regulators. When the proposed EchoStar/DirecTV combination ran into trouble in Washington, D.C., the satellite TV company offered to divest its DBS spectrum at 61.5 degrees and give the orbital location and a satellite to Cablevision's DBS endeavor in order to win regulatory approval for the deal.
Cablevision's DBS dreams worry some on Wall Street. Last week, Merrill Lynch analyst Jessica Reif said that, in her opinion, the best outcome for the Rainbow DBS business "is an outright sale to EchoStar for $300-$500 million."
Posted January 22, 2003 at 4:38 a.m.
OUTSIDE THE BOX: Satellite Global and National, But Really Local
By Chuck Hewitt
This week's SkyBOX addressed the need for a local presence for home satellite companies faced with threats from hometown cable and telco video. But the issue is much wider than that - and it's one we've all too often forgotten due to satellite's advantage in point to multipoint distribution.
Satellite's national footprint for delivery of programming carries future opportunities, which I plan to discuss in later articles. However our "national" delivery advantage has sometimes clouded our thinking into believing that we are a national business not a local one. Yet we compete against local businesses whether cable systems or telcos and it's hard to compete against local with 1/800-television.
Much of satellite's original success was built on the backs of some very good and successful local retailers. Back in the days of C-Band, a strong local presence was necessary due to the technical expertise required to install, and maintain, the systems. And any retailer who survived C-Band scrambling and piracy certainly demonstrated superior business skills and competency.
With the launch of DBS, some believed the need for local expertise ended, that consumers could self-install their systems. This ignored the cliché that the average consumer cannot set the time on their VCR. Skilled installers, technicians and sales people are needed. Today, as cable and telco ramps up the offerings from its "local" systems, they are more needed than ever.
Recently there have been some positive signs that the industry is moving to a more local distribution system; the development of new training programs established by DirecTV, EchoStar, NRTC and SBCA is also a positive sign. Yet a stable, locally-based sales and installation presence has yet to be achieved. Programs directed at retailers change frequently and lack the needed incentives for success.
To be sure, consumer electronics and mass merchandisers have become increasingly important in our industry's sales. Yet at the same time the need for local expertise has become more and more critical. With increasing competition on all fronts, it's quite apparent that the future of this industry is increasingly dependent on LOW CHURN - our rallying cry going forward.
Achieving low churn is not difficult: All it requires is a satisfied subscriber. That means one whose system works and who receives quality installation and customer service. And where will that quality come from? The local retailer, of course, who can provide a real identifiable presence in the community.
Franchising, company-owned local stores, company-identified sales and installation teams can all help us achieve a better local presence. But none of these will work unless these retailers have a business relationship with platform providers that ensures ample rewards for quality installation and service.
To encourage a strong local presence, the platform providers can offer incentives for upsale on expanded program packages and on additional equipment such as surround sound. In addition, they can free the retailers to initiate sales and marketing based on specific local circumstances. In return, I believe the platform providers will see significantly reduced churn as they become the local presence via uniform logos or branded trucks. Plus community-based stores are in the best position to help identify and fight community and state laws that seek to discriminate against satellite. (Today cable companies are attempting to pass laws in several states that unfairly tax satellite-delivered programming.) And, of course, "locals" are in the best position to fight local piracy, and to convince prosecutors to fight it. They can bring civil actions against local consumers stealing the signal which sends a strong, effective message that "yes, you too may be caught."
These are the advantages we can gain with stable local retail organization that is appropriately rewarded for performance while being held responsible for quality installations and service.
Posted January 22, 2003 at 4:37 a.m.
Sirius Gets NBA Coverage
Sirius will carry live audio broadcasts of NBA regular season games, playoffs and NBA Finals as part of its standard programming package under a deal struck by the satellite radio service and the league.
Beginning in mid-February, basketball fans can hear up to 40 NBA games each week as part of Sirius' standard programming package consisting of 100 music and entertainment streams. In addition to the play-by-play coverage, Sirius will implement media and marketing initiatives with various NBA properties.
"Adding NBA games immensely enhances our service for our valued subscribers," said Larry Rebich, Sirius vice president, programming and market development. "Sirius is proud to offer the best in sports programming at no extra charge."
Posted January 22, 2003 at 4:37 a.m.
DISH Readies Earthlink Relationship
EchoStar took the wraps off its Earthlink partnership in which the Internet service provider's DSL and dial-up services will be offered to DISH Network customers.
In a satellite feed delivered to DISH Network retailers Tuesday, EchoStar said DISH Network customers who sign-up for Earthlink DSL will get a $5 a month discount on satellite TV services and a $5 discount on the high-speed Internet access offering. That represents a savings of $120 a year. The dial-up savings are $72 a year, with a $3 discount on both Earthlink and EchoStar offerings.
EachoStar and Earthlink first announced their partnership in April.
Posted January 22, 2003 at 4:36 a.m.
NDS: Court Dismisses Most of DirecTV Suit
The U.S. District Court for the Central District of California dismissed most of a lawsuit concerning conditional access technology filed last September by DirecTV against NDS Group, News Corp.'s TV tech unit said late Tuesday.
According to NDS, the court dismissed claims brought by DirecTV alleging fraud, breach of warranty and violation of the Federal Communications Act. The court also dismissed the bulk of five other DirecTV claims, including those for breach of contract, breach of fiduciary duty, breach of the covenant of good faith and fair dealing, and statutory violations, NDS said in a statement.
Abe Peled, president and CEO at NDS, said the company is confident DirecTV's remaining claims will be dismissed "once all the facts are presented to the court."
The other claims relate to an alleged misappropriation of trade secrets. Peled said, "The evidence developed in this case will show that DirecTV's lawsuit is nothing more than an attempt to circumvent restrictions on DirecTV's future use of NDS' intellectual property and a last ditch effort to scapegoat NDS for piracy problems which in fact result from DirecTV's own gross mismanagement."
In response, DirecTV said it's disappointed with the court's ruling, but the company will continue to press its case against NDS. "Since we have not yet been served with the final order, we cannot comment on what our next legal steps will be," DirecTV said.
"It is important to point out that no decision in this litigation is expected to affect DirecTV's contractual right to control the operation and future development of its smart card, headend, and set-top box technology," the company addded. "In keeping with its commitment to protect the security of its system, DirecTV continues to transition control of its conditional access technology to its internal engineering group."
DirecTV said it expects the transition will be completed this year, as originally anticipated when it commenced the transition in April 2002.
Posted January 22, 2003 at 4:35 a.m.
DISHed Again ... The Speculation Frenzy
A frenzy of speculation broke out Tuesday on word that executives from EchoStar have - gasp! - spoken to execs at News Corp. and Liberty Media about a possible sale of the company.
Gee. What a surprise.
As anyone who's watched Charlie Ergen for any length of time knows, he's always ready to talk deals. Upsides, downsides and inside out. So the notion that he might be on the phone with Rupert Murdoch or John Malone, or both, hardly comes as a big shock. Besides, at this particular moment, we believe Charlie has at least three potential reasons for holding such discussions:
If there's a big pot of money out there, ready to buy into DBS (as via a Hughes transaction), Charlie would quite naturally like to get his hands on it. Take the money and run is not necessarily a bad business strategy.
In our observations of Mr. Ergen, he loves nothing more than winning. In his book, winners usually implies losers and his favorite pick for that role is Hughes Electronics. If he can get in there and mess up the deal for Hughes, do you really think he wouldn't do it?
With the Hughes/EchoStar merger dead, and cable geared up for a better competitive fight, EchoStar's long-time, low-ball strategy is looking a tad risky. All those subs bought with cheap equipment and special programming deals pose a fairly high potential for churn. So back to our No. 1: Take the money and run could be a pretty good option.
Of course, most observers doubt that any serious discussions have yet been held between Ergen and potential buyers. Besides, the real question is whether News Corp. would have anything to do with Ergen, who has repeatedly outfoxed the Fox boss, Rupert Murdoch. Speculation on the Street, in fact, suggests that the whole "Charlie's gonna sell" story was started by News Corp. partisans seeking to get Hughes to the table.
Said William Kidd, satellite analyst with Lehman Brothers, "We believe that it remains an unlikely scenario in which EchoStar is sold. Rather, we feel the more likely situation may be posturing on the part of GM, News Corp. and Liberty about whether or not GM gets a premium for its GMH stake." Hmmm...
Posted January 21, 2003 at 3:28 a.m.
TECHNOLOGY: 24/7 Real Media Supports DirecTV
24/7 Real Media Supports DirecTV - 24/7 Real Media, an interactive marketing company, said DirecTV selected its Open AdStream to deliver targeted communications to users of DirecTV.com. DirecTV will use 24/7 Real Media's technology to manage the delivery of targeted content on its Web sites to both potential and existing customers.
Gilat Inks GTECH Deal - Gilat Satellite Networks' U.S. subsidiary Spacenet signed multiple agreements with global lottery services company GTECH Corporation to install more than 10,000 Gilat Skystar Advantage broadband satellite communications terminals for lottery networks in California, Minnesota, Kansas and New York. The announcement follows a previously announced agreement with GTECH to use Gilat's Skystar Advantage VSAT platform at more than 6,000 sites throughout Texas.
Firm Recognizes Hughes - Frost & Sullivan awarded Hughes Global Services with its Innovative Satellite Service of the Year Award. The firm said it wanted to recognize HGS' approach to serving customers, particularly in the offering of high-quality satellite services in a combination of traditional leased capacity and salvaged space assets.
Posted January 21, 2003 at 3:27 a.m.
DISH 5 Million ITV HHs: Top in U.S.
In case you missed the news: EchoStar's DISH Network said it has more than 5 million households that can access its 14 interactive TV channels, an accomplishment which may make it the top provider of ITV content in the United States.
DISH Network customers receive the ITV offering - DISH Home - as an added benefit to their programming packages. DISH Home offers "on-demand" access to news, weather, entertainment, sports and other information normally found from other resources, all available through a click of the remote control.
Customers also can pay their DISH Network bill via the service. More interactive channels are expected to be added to the 14 currently available, EchoStar said.
DISH Home content providers include STATS, Visiware, Tribune Media Services, Gist Communications, Games Inc.'s Lottery.com unit, AccuWeather, OpenTV and EchoStar. All interactive channels are powered by OpenTV, the ITV company providing software, content and applications for delivering and managing interactive television services.
Posted January 21, 2003 at 3:26 a.m.
Piracy Tech Still Safe, DirecTV Says
Despite a potential leak of information concerning its latest conditional access technology, DirecTV executives insisted that its newest access card - the P4 - has not been compromised by hackers.
In a conference call last week, DirecTV President Roxanne Austin said the P4 card is still safe. "We do not have any evidence, nor does the FBI have any evidence, that the P4 card has been compromise in any way," she said.
Earlier this month, a college student - working for a law firm representing DirecTV - was charged by federal authorities for allegedly distributing documents on the Internet concerning the new conditional access technology. Press reports said DirecTV has spent more than $25 million to develop its latest anti-piracy efforts.
Austin said DirecTV will continue to roll out new conditional access technology in 2003, which will include the swap-out of more customer access cards.
This year, DirecTV also takes complete control of its conditional access technology from NDS, its previous supplier. "We are pretty excited about some of the innovations we will be putting in place in 2003," Austin said.
Posted January 20, 2003 at 6:38 a.m.
New Money Deals for Satellite Cos
Two satellite companies announced new money moves late last week.
On Friday, XM Satellite Radio said it increased its previously-announced financing commitments to $475 million with an additional $25 million commitment from investors spearheaded by Everest Capital Limited. The funding concerns XM's proposed 10 percent Senior Secured Convertible Discount Notes due 2009.
In December, XM announced a set of financing agreements totaling $450 million, consisting of $200 million in new funds from strategic and financial investors and $250 million in payment deferrals and related credit facilities from General Motors. With the Everest deal, the new funds component will be increased to $225 million.
Also last week, Globalstar and New Valley Corp. announced an agreement under which New Valley will provide the sat-phone company with debtor-in-possession (DIP) financing as the first step toward assuming majority ownership of a new, reorganized Globalstar entity.
Subject to approval by the U.S. Bankruptcy Court in Delaware, the agreement calls for New Valley to make an investment of $55 million in Globalstar.
Posted January 20, 2003 at 6:37 a.m.
News Corp., Cablevision Work Out Sports Deal
News Corp. and Cablevision said Friday they will keep intact their sports programming partnership, Regional Programming Partners (RPP), through December 2005.
The partnership, which includes Fox Sports nets and other regional sports channels and Madison Square Garden assets, remains essentially in place for three more years. Cablevision will keep its 60 percent stake and News Corp. will retain 40 percent.
Under the new deal between the two companies, News Corp. didn't exercise its option to put back its interest in RPP. That put option expired Friday and is not exercisable again until December 2005. News Corp. did elect a secondary option, reducing its 50 percent stake in two regional nets, Fox Sports Net Chicago and Fox Sports Net Bay Area, down to 40 percent.
The deal comes at an interesting time for both companies.
For starters, some speculated that the regional sports channel move will allow News Corp. to reserve funds for a possible bid for Hughes Electronics and DirecTV. As for Cablevision, the agreement allows the debt-laden cable operator to focus on its internal matters.
Posted January 20, 2003 at 6:36 a.m.
FCC Denies Station on DISH/HD Complaint
As expected, the Federal Communications Commission dismissed a complaint filed by Florida station WHDT that asked the agency to force EchoStar to carry its local broadcast signals in digital high-definition format.
WHDT, which serves the West Palm Beach market, asked the commission to declare that a digital-only television station is entitled to must-carry rules contained in the Satellite Home Viewer Improvement Act. The rules state that if one local station is carried in a specific market, then all other stations must be delivered via satellite.
The FCC said the station's complaint is "premature" in its dismissal order. "Given the absence of rules relating to the satellite carriage of digital television signals, the commission lacks the basis to act on complaints such as the one brought by WHDT," the FCC said.
The FCC said the complaint may be re-filed, if necessary, after digital satellite carriage rules are adopted by the commission.
Posted January 17, 2003 at 9:48 a.m.
PROGRAMMING: DirecTV Offers Richmond Locals
DirecTV Offers Richmond Locals - DirecTV said it's offering local channels via satellite in Richmond, Va. Beginning yesterday, the following channels became available in the Richmond designated market area: WTVR (CBS), WRIC (ABC), WWBT (NBC/WB), WCVE (PBS), WRLH (FOX), WCVW (PBS) and WUPV (UPN).
Teen Network Debuts - VTV:Varsity Television officially launched on Galaxy 11, Transponder 13 and was added to Pod 14 of Comcast's Headend in the Sky (HITS). VTV fills the gap in youth programming between Nickelodeon (kids 3 to 12) and MTV (adults 18 to 34). The new network is co-founded by Joe Shults, a member of the executive team that launched MTV, Nickelodeon and VH1 as well as one of the original management members for E! Entertainment.
TBS Features Makeover Movies - TBS Superstation brings it all together with its newest hosted movie showcase, "Movie & A Makeover," set to premiere with "The American President" on Feb. 8 at 11 a.m. EST. Movie & Makeover is hosted by Mia Butler and features hot movies paired with innovative and fun makeovers.
Posted January 17, 2003 at 9:47 a.m.
Honda Expands XM Availability
XM will be available as an option on several Acura and Honda models, the satellite radio company announced Thursday.
Scheduled to be released in the spring, the 2004 Acura RL will be delivered with XM Satellite Radio hardware as standard equipment. That debut will be followed by availability on the all-new 2004 TL sedan in the fall.
For Honda products, a dealer-installed option will be available in the spring on the 2003 Accord and Pilot. American Honda said it expects to have XM Satellite Radio factory-installed beginning with the 2004 Accord.
American Honda also said it will expand the availability of XM-ready radios to additional Honda and Acura models during the 2005 model year and into the future.
Posted January 17, 2003 at 9:45 a.m.
Wall Street Eyes DirecTV's 2003
Those on Wall Street had different opinions on Hughes' fourth quarter and year-end results released earlier in the week.
Armand Musey, satellite analyst with Salomon Smith Barney, said Hughes completed 2002 "with some of the wind knocked out of DirecTV’s sails, but managed to deliver on most of its financial targets."
Hughes' DirecTV unit ended 2002 with growth (975,000 net additions) that was lower than management was forecasting earlier in the year (1 million to 1.2 million net adds), "which we believe reflects its failure to see the significance of allowing (EchoStar's) DISH to break into its formerly exclusive distribution channels," Musey said.
The most striking item to come out of Hughes’ conference call Wednesday was its outlook for 700,000 to 800,00 net additions for DirecTV in 2003, Musey said. "We acknowledge DirecTV has been hit hard by DISH Network’s entry into its distribution channels," he said. "However, we still believe DirecTV will capture a larger share" in 2003 and 2004, he said.
Another analyst, William Kidd of Lehman Brothers, said DirecTV's forecasted 2003 ARPU (average revenue per subscriber) growth appeared anemic at 1 percent. SAC (subscriber acquisition cost) is projected to rise 8 percent to 9 percent. And subscriber growth - at the gross level - also is expected to be flat to down year-over-year, he said.
"In some respects we are sympathetic to the company's plight," Kidd said. "We do not fault them for the increase in SAC, as it's terribly important that DBS operators remain competitive with cable, and increasingly that DirecTV remain competitive with EchoStar."
In order to achieve that competitiveness, money must be spent, Kidd said. That has been the trend in the business for several years, but 2003 may be unique in that it could the first time DirecTV's gross additions could be down despite of an increase in SAC.
"It's counterintuitive and altogether disconcerting that DirecTV finds itself in a position of having to hang more bait on the lure in the pond of prospective subscribers, but expects to catch less than it did," Kidd said.
Posted January 16, 2003 at 2:26 a.m.
Sirius, XM Move on Money Plans
The Federal Communications Commission approved Sirius' application to transfer control of its operating licenses in connection with its recapitalization.
In its order approving the application, the FCC said the move will allow Sirius to access financial resources necessary to maintain and expand its service. The company said it filed the transfer application because of the significant amount of common stock expected to be issued to debt holders and preferred stockholders in connection with the restructuring.
"We are very pleased to have received swift approval of our application from the FCC," said Patrick Donnelly, executive vice president and General Counsel for Sirius. "This is an important step in the process of completing our recapitalization, which we continue to believe will be consummated this quarter."
In another satellite radio move, XM said it received consents from an investor group and General Motors, which together are providing $450 million in new financial investment and support in conjunction with an exchange of debt due 2010, to reduce the minimum exchange offer participation threshold from 90 percent to 75 percent.
XM said it amended the exchange offer to reduce the minimum participation condition to 50.1 percent. The financing transactions are currently conditioned upon 75 percent participation by existing noteholders in the exchange offer, and XM will close on the exchange offer only if the minimum participation condition to the financing transactions are satisfied or waived.
Posted January 16, 2003 at 2:25 a.m.
Cablevision DBS Worries Wall Street
Despite recent layoffs and restructuring charges, Chuck Dolan's Cablevision continues on its quest to launch a DBS service - and that's got some on the Street mighty worried.
In a recent note to investors, Merrill Lynch analyst Jessica Reif Cohen notes that, in her opinion, "The best outcome for the (Cablevision) DBS business is an outright sale to EchoStar for $300-$500 million."
But Dolan - recently nominated as one of the "worst CEOs" by Business Week magazine - seems intent on proceeding. Says Reif, "Despite the potential for signal interference west of the Mississippi, the $1.5 billion-plus cost, and difficulty of providing a viable service with just one satellite, we believe that Cablevision intends to provide proprietary content on the DBS service and launch a third competitive U.S. satellite service."
Cablevision must launch its satellite by the end of this March or risk losing its FCC license.
Posted January 16, 2003 at 2:24 a.m.
PanAmSat Looks to Australia Ka-Band
PanAmSat, the commercial satellite operator controlled by Hughes Electronics, is eyeing Australian Ka-Band capacity while giving up most of its U.S. Ka-Band capacity.
PanAmSat said Tuesday it filed for nine Ka-Band orbital slots through the Australian Communications Authority (ACA), the country's telecommunications commission. The ACA forwarded the filings to the International Telecommunications Union for final approval.
The Australian Ka-Band filings will replace all but one of PanAmSat's U.S. Ka-Band orbital filings. A PanAmSat spokesperson confirmed the company's Ka-Band moves for the United States, but wouldn't state what orbital locations are impacted by the decision.
Ka-Band promises to deliver next-generation satellite services, such as satellite-based broadband.
"We believe that the market for broadband services using Ka-Band is more likely to develop within the timeframe of our new filings in the later part of this decade," said James Cuminale, executive vice president, corporate development and general counsel at PanAmSat. "Given the current market climate, we decided to relinquish our U.S. Ka-Band orbital locations, which would have required systems to be placed in service before 2005."
Posted January 16, 2003 at 2:24 a.m.
DirecTV Helps Hughes 4Q
The improving operating performance at DirecTV U.S. helped Hughes Electronics in the fourth quarter, but company officials said they still need to deal with issues at other units - including struggling DirecTV Latin America.
During a conference call Wednesday, executives hyped efforts taken at DirecTV during the past 18 months to lower churn, reduce subscriber acquisition costs and increase monthly revenue per subscriber. They said that work helped DirecTV fourth quarter revenues increase by more than 19 percent to about $1.8 billion and push up EBITDA to $191 million when compared to the same period in 2001.
DirecTV ended 2002 with 11.18 million subscribers. As for projections, DirecTV execs said they expect the service to add between 750,000 and 800,000 net subscribers in 2003. The company also plans a $2 rate increase for certain packages.
Shaw said Hughes continues to shut down its DirecTV DSL service and address issues surrounding DirecTV Latin America. The CEO said DirecTV Latin America's "condition is unacceptable" and that a bankruptcy for the unit may come at the end of the month.
Shaw said Hughes moved quickly to address issues facing DirecTV Broadband and DirecTV Latin America as soon as its proposed merger with EchoStar was terminated. "As a result of our recent announcements to shutdown DirecTV Broadband and restructure DirecTV Latin America, we expect to reduce our cash requirements by several hundred million dollars over the next few years," he said.
Spaceway, Hughes' next-generation satellite platform, has met most of its cash requirements, Shaw said. The platform needs $400 million - mostly for the launch of satellites - to get to the next step, he said. Shaw emphasized that Spaceway will be marketed to enterprise customers when it rolls out in 2004, and will target residential users when that potential "is proven."
Shaw wouldn't elaborate on any potential acquisition of his company. It's expected that News Corp. may bid for the Hughes and DirecTV assets. Hughes abandoned its merger with EchoStar in December due to government antitrust concerns.
Hughes reported fourth quarter revenues increased 8.3 percent to $2.471 billion, compared with $2.281 billion in the fourth quarter of 2001.
Posted January 15, 2003 at 11:22 p.m.
GM Expands XM Availability
General Motors will offer XM Satellite Radio on 44 of 57 GM models, representing more than three-quarters of the auto giant's fleet, the companies announced Tuesday.
In November 2001, GM became the first automaker to offer XM as a factory-installed option on 2002 Cadillac DeVilles and Sevilles. For the 2003 model year, GM expanded XM service to 25 car, truck and SUV models, and Cadillac was the first division to offer XM across its entire product portfolio.
The launch on 44 vehicle models will start with the 2004 model lines. Among the models that will be offering XM are the Chevrolet Malibu, Malibu Maxx, Colorado and GMC Canyon mid-size pick-ups. XM will also be available on GM's high-volume SUVs including the Chevy Trailblazer, GMC Envoy and the new Buick Rainier.
Posted January 15, 2003 at 11:21 p.m.
OUTSIDE THE BOX: Satellite Vs. Cable - Coexistence, But Not Peaceful
By Tom Watts
Last week in "Outside the Box," Doug Shapiro deftly answered the question, “Can Cable, DBS Coexist?” I agree with his conclusion that cable and DBS have set different courses to survive, thus avoiding all-out war. However, in the absence of war, I expect continuing battles and skirmishes rather than peace. These skirmishes may have major impact on the DBS industry, determining whether it ultimately peaks out in the low 20 millions of subscribers, a little above today’s levels, or expands substantially, reaching 35 million or more. We foresee DBS faring well in these battles, ultimately reaching the high end of this range.
KEY BATTLEGROUNDS
Cable has a number of weapons to use in its battles with satellite, including incremental services, exclusive programming and pricing. The incremental services provide the most interesting battlefront. While no incremental service is likely to enable cable to decisively capture DBS subscribers, each service has the potential to raise retention of existing cable subscribers, making it harder for DBS to grow.
Video-on-Demand. Video-on-demand (VOD) is one of the most powerful additional services, because of satellite’s difficulty in offering a directly competing product. To leverage this advantage, cable operators are rolling out VOD rapidly. The FCC cites Cox having VOD capability for 30 percent of homes passed and Comcast for nearly 50 percent of homes passed. Every cable operator is implementing VOD, often together with its ancillary service Subscription VOD (SVOD). As industry observers, we must follow the success of VOD closely. If it becomes a must-have service for viewers, growth of DBS could be slowed.
DBS is not left without ammunition. Both EchoStar’s and DirecTV’s aggressive promotion of personal video recorders (PVRs) should blunt the VOD attack. However, the functionality differs from VOD. We expect continued skirmishes as cable grow more adept in its VOD implementations.
Broadband. While cable’s VOD products remain in early stages, cable broadband has already gained powerful momentum. By year-end 2002, more than 50 million homes had access to cable modem services and subscribers totaled more than 11 million homes. This number will continue to climb rapidly.
To date, DBS operators have offered no viable response. DSL alliances have failed. First generation satellite broadband projects lack viable economic models. Second generation projects remain at least two years away. By the time DBS has a viable satellite broadband product, cable modems could capture 20 million subscribers, who would then be less likely to switch to DBS.
We expect 2003 to offer a number of intriguing developments on the broadband front. WildBlue should get back on track and offer a viable independent service that DirecTV and/or EchoStar could bundle with their video offerings. Alternatively, DirecTV or EchoStar could choose go-it-alone paths using Spaceway or EchoStar IX, although partnering looks much more attractive financially. Regardless of path, we expect the DBS operators to have a satellite broadband service with pricing and capability competitive with cable modem by 2006.
Voice Telephony. Residential telephony represents a rising force. As of June 2002, 2.1 million customers received their local telephone service from their cable operator. Satellites, with their quarter-second delay in each direction, have no response to this cable offering.
We do not expect voice telephony to be decisive in a choice of video providers. However, once a cable customer chooses phone service from his cable company, it represents more reason not to switch to DBS.
HDTV. The DBS players are making a major push in HDTV, being the first to offer HDTV nationwide. Both DirecTV and EchoStar have reinforced their commitment in the last week by integrating HDTV with their PVR strategies. We expect many cable operators to be slow in rolling out HDTV beyond the digital channels of their local broadcasters. This presents a sizable opportunity for DBS and could drive the next phase of growth.
DETENTE
Despite these battles, we do not expect cable and DBS to resort to their most powerful weapon – PRICE. Cable continues to use its incumbent status to impose regular price increases on the industry. Last year the cable industry raised rates an average of 6.3 percent. They have announced additional price increases this year.
Cable’s continued price inflation creates an attractive pricing umbrella for DBS to raise rates as well, while still offering a discount. EchoStar took advantage of this last week, raising its prices an average of 4 percent. Our pricing analyses show EchoStar typically prices about 29 to 35 percent under cable for comparable packages, while DirecTV prices 7 percent to 24 percent under cable. This price advantage should enable DBS to continue to grow. And, as Doug points out, cable is highly unlikely to respond with price competition.
Given the DBS price advantage and its expected ability to respond to service innovations, we project DBS can grow from its 19 million subs today to 35 million by 2011, increasing its market share from 21 percent to 30 percent. Cable can also expand, even while losing market share, from 69 million to 76 million subscribers, while also, of course, reaping the benefits of revenues from new services and higher prices.
Co-existence may not be peaceful, but it should be profitable.
Tom Watts works for SG Cowen Securities.
Posted January 15, 2003 at 11:20 p.m.
Sat TV Drags Down RadioShack
RadioShack reported that fourth quarter 2002 total sales decreased 1 percent, to $1.5 billion, from $1.52 billion recorded in fourth quarter 2001.
On a comparable store basis, sales were up 2 percent for the quarter.
The national electronics chain took it on the chin when it came to home entertainment sales. Those sales were down 17 percent, and the decline was attributed to lower sales of satellite TV systems.
RadioShack sells both DirecTV and EchoStar's DISH Network at its stores.
However, RadioShack is optimistic about its overall future. "Year-over-year sales, which improved every month of the quarter, were very strong in product categories such as portable computing, digital photography, personal electronics and portable audio," said Leonard Roberts, chairman and CEO.
"When combined with a strong start to January, the company's sales trend is clearly improving," he said.
Posted January 13, 2003 at 5:26 a.m.
XM Declares Dividend on Series B Stock
XM Satellite Radio Holdings said that it declared a regular quarterly dividend on its 8.25 percent series B convertible redeemable preferred stock.
The dividend is payable in shares of XM's class A common stock at a rate of $1.0313 per share of series B preferred stock owned, with fractional shares to be paid in cash. The shares of class A common stock to be issued will be valued at 95 percent of the average daily price of the class A common stock for the 10 consecutive trading days ending on Jan. 15. The dividend is payable on Feb. 1, to series B convertible preferred stockholders of record of XM Satellite Radio Holdings Inc. as of Jan. 22.
Earlier this week at the Consumer Electronics Show, XM announced it had more than 360,000 subscribers.
Posted January 13, 2003 at 1:02 a.m.
DirecTV to Launch 50 Additional Local Markets
DirecTV said that it will launch local broadcast channel services in up to 50 additional markets by the end of this year; ten of these new markets will be served by the end of June.
DirecTV currently offers local broadcast channels in 51 markets. With the successful launch of the DirecTV 7S spot beam satellite in the fourth quarter, and using advanced digital compression technology, DirecTV will provide local broadcast channel service in approximately 100 markets by year-end, representing roughly 84 percent of U.S. television households.
The first 10 of these new markets will launch throughout the first half of this year, beginning with Richmond, Va., on Jan. 16. The next nine markets are Colorado Springs, Colo.; Wilkes-Barre, Pa.; Roanoke, Va.; Green Bay, Wis.; Tucson, Ariz.; Shreveport, La.; Jackson, Miss.; Louisville, Ky. and Des Moines, Iowa.
Additional market launches will be announced later this spring.
Posted January 10, 2003 at 10:25 a.m.
XM Reaches 360,000 Subscribers
Washington D.C., January 09, 2003/Satnews Daily/ — XM Satellite Radio announced today it has signed up more than 360,000 subscribers, extending its market leadership in digital satellite radio.
"XM had an outstanding fourth quarter, adding 145,000 subscribers, a 72 percent increase in subscribers over our cumulative total at the end of the third quarter and more than five times as many subscribers as we signed-up in the fourth quarter of 2001," said XM President and CEO Hugh Panero. "XM's accelerating subscriber growth has been fueled by 'the second launch of XM' in new vehicles from General Motors and other automakers, and by our 'third launch' into the home and portable markets with our next-generation SKYFi receivers, including XM's first portable radio."
"XM expects a very strong 2003, with new subscribers approximately triple those obtained in 2002", Panero continued. "By year-end 2003, XM will have crossed the one million subscriber mark and be firmly established as a mass-market product."
XM ended 2002 with more than 347,000 subscribers. The Company had thousands of additional radios sold at retail but not yet activated by year-end - demonstrating the attractiveness of XM as a Holiday gift. The first XM "boomboxes" reached retail shelves very late in the quarter and sold out almost immediately, indicating a significant near-term market for this breakthrough product - the first XM receiver requiring no installation and able to be utilized in the home or "on the go" without any adapter devices.
In 2002, the Delphi SKYFi, XM's plug-and-play radio incorporating the most advanced user features of any satellite radio on the market today, proved to be a "hot" Christmas gift. Compact and attractive, the complete SKYFi system costs less than $200. SKYFi can be set-up in the car, home, office, or virtually anywhere a subscriber chooses to enjoy XM's 101 channels of revolutionary programming.
XM's new portable satellite radio, the Delphi SKYFi Audio System, is expected to be a strong seller during 2003. "This boombox extends XM Radio's merchandising beyond retailers' car stereo sections to their portable audio and HiFi departments; it also should broaden XM's appeal to younger audiences," Panero said.
On the OEM side, GM and other automakers like Honda and Nissan will expand their XM-equipped vehicle offerings. General Motors currently provides factory-installed XM radios in 25 lines of cars, light trucks and SUVs, including household names such as Buick, Cadillac, Chevrolet, GMC, Oldsmobile and Pontiac, and plans to eventually expand XM availability across its entire product line.
In the funding area, XM announced in late December a set of definitive financing agreements totaling $450 million - consisting of $200 million in new funds from strategic and financial investors and $250 million in payment deferrals and related credit and payment facilities from General Motors. In addition, XM commenced an Exchange Offer for its outstanding 14 percent Senior Secured Notes. With the new funds and payment deferrals from these transactions, XM expects to achieve full funding through cash-flow breakeven. XM anticipates all necessary conditions and approvals related to these financings will be satisfied by the end of February 2003.
XM is transforming radio, an industry that has seen little technological change since FM, almost 40 years ago. XM's programming lineup features 101 coast-to-coast digital channels: 70 music channels, many of them commercial-free, from hip hop to opera, classical to country, bluegrass to blues; and 31 channels of sports, talk, children's and entertainment. XM's strategic investors include America's leading car, radio and satellite TV companies -- General Motors, American Honda Motor Co. Inc., Clear Channel Communications and DIRECTV.
Posted January 10, 2003 at 10:23 a.m.
EchoStar Increases Rates, Enhances ITV Offerings
EchoStar Communications said that effective Feb. 1 its DISH Network satellite TV service will increase basic rates by $2 per month. EchoStar also said that more than 5 million DISH Network households now have access to 14 interactive TV channels with more to be announced soon.
Since DISH Network's average basic subscriber pays over $50 per month, this equates to an increase of less than 4 percent over 2002 rates. This price increase is dramatically lower than recently announced cable rate increases. Rising programming costs and the addition of a variety of new basic channels necessitated the DISH Network increase.
DISH Home, a gateway to customer support, entertainment, news and weather, games, lifestyles and sports, is available at channel 100. EchoStar is demonstrating these interactive TV features at Consumer Electronics Show (CES), booth #25167, in the Las Vegas Convention Center, Jan. 10-12.
Also, Charlie Ergen, CEO and chairman of EchoStar, commented on the aftermath of the defunct DirecTV/DISH merger: "It was my fault that we didn't convince regulators to approve the merger. Life goes on. Certainly, as a company, we're more experienced."
EchoStar also introduced a HD monitor concept product that's 36 inches, direct view high-def TV and will be packaged with a number of EchoStar DBS products.
Posted January 10, 2003 at 10:22 a.m.
DirecTV to Launch 50 Additional Local Markets
DirecTV said that it will launch local broadcast channel services in up to 50 additional markets by the end of this year; ten of these new markets will be served by the end of June.
DirecTV currently offers local broadcast channels in 51 markets. With the successful launch of the DirecTV 7S spot beam satellite in the fourth quarter, and using advanced digital compression technology, DirecTV will provide local broadcast channel service in approximately 100 markets by year-end, representing roughly 84 percent of U.S. television households.
The first 10 of these new markets will launch throughout the first half of this year, beginning with Richmond, Va., on Jan. 16. The next nine markets are Colorado Springs, Colo.; Wilkes-Barre, Pa.; Roanoke, Va.; Green Bay, Wis.; Tucson, Ariz.; Shreveport, La.; Jackson, Miss.; Louisville, Ky. and Des Moines, Iowa.
Additional market launches will be announced later this spring.
Posted January 9, 2003 at 3:09 a.m.
Consumer Groups: Cable Rates Out of Control
from skyreport
Citing recent rate increases by cable companies, the Consumer Federation of America and Consumers Union released a report Wednesday bringing attention to continuing fee hikes for wired TV services.
In their presentation, the groups said rising rates are out of control since cable operators continue to take advantage of their monopoly power. The consumer groups insisted that exorbitant cable rate hikes are largely due to the lack of direct competition that exists for a majority of cable companies nationwide.
The groups also said they don't buy the cable industry argument that rates continue to increase due to skyrocketing programming costs. Industry and government statistics show that cable revenues are rising much faster than industry costs, they said. And revenues from advertising, digital cable and other add-on services are enough to cover the expense of upgrades and programming costs, the groups insisted.
In addition, operating margins for cable operators have been increasing dramatically since 1997, reaching a projected $18.8 billion a year in 2002, $7 billion more than it was in 1997. "If costs were really the cause of rising prices, then the cable industries’ operating margins – the difference between its revenues and costs - would not be rising," the report from the two groups said.
The Consumer Federation and Consumers Union also criticized the Federal Communications Commission for not doing enough to curb cable prices. "The FCC appears to have little interest in reigning in cable operators, since Michael Powell, who chairs the agency, insists that rising prices are not a consumer problem," they said.
Posted January 9, 2003 at 3:08 a.m.
Sirius, XM Roar Upon CES Scene
from skyreport
With Sirius upping the ante by introducing several new product features, including new video capabilities, and XM brushing aside any new announcements aside from saying it hit its end-of-year subscriber marks, the Consumer Electronics Show was buzzing with satellite radio excitement Wednesday.
Sirius is becoming something different. It’s dropped the “satellite radio” portion of its name and is striding into other mobile and home offerings for consumers. Not only has Sirius reformed its name, it now refers to its radio channels as "streams." And, with the changes come new announcements.
The facelifted Sirius is offering a slew of new products, including models that enable consumers to listen to Sirius in their homes and offices, as well as a wide selection of plug-and-play portable units that can be moved from vehicle to home, or vehicle to vehicle.
Sirius also announced several new "streams" - nine to be exact. Listeners will soon hear the tunes of "Jam Central" (17), "Planet Rhyme" (41), "Wax" (42), "House Party" (60), "The Rave" (62), "Folk Town" (94), a revamped "The Trend" (18) and "Movin' Easy" (04). Plus, Sirius introduced some new news and entertainment streams, including: The Weather Channel Radio Network East (110), Central (111), West (112), "Sirius Left" (145), "Sirius Right" (144) and "Court TV Plus" (134).
XM foregoed the product and "streams" announcements at the Las Vegas gig, but had plenty to talk about. The satellite radio company did announce it reached the 360,000 subscriber mark and expects to hit the 1 million mark by the end of 2003.
Hugh Panero, president and CEO of XM, did allude to some future announcements: "We will have new products coming out over the next few months. However, I will just tease you with that."
Posted January 9, 2003 at 3:06 a.m.
DirecTV Latin America Eyes Restructuring
DirecTV Latin America, struggling with the continuing downturn in the South/Central American economy, said it has initiated discussions with programmers, suppliers, lenders and business associates to address its financial and operational challenges.
Issues DirecTV Latin America is trying to address include excessive fixed costs and a substantial debt burden, all of which are occurring during a time of economic deterioration throughout the Latin American region. If discussions with partners don't result in reasonable agreements, DirecTV Latin America Chairman Kevin McGrath said the company would consider other options, including a restructuring under Chapter 11 bankruptcy.
"There are some significant contracts that need to be realigned with the realities of the marketplace," McGrath said. "We will also continue to encourage programmers and suppliers to share directly and appropriately the risks of exchange rate fluctuation and currency devaluation."
DirecTV Latin America has retained AlixPartners, a turnaround and management services firm, to assist with its restructuring initiative. Michael Feder, a principal at AlixPartners, was named chief restructuring officer at DirecTV Latin America, reporting to McGrath.
Posted January 8, 2003 at 12:25 p.m.
Company unveils satellite TV for cars
Wednesday, January 8, 2003 Posted: 9:26 AM EST (1426 GMT)
KVH says its system will allow cars to receive more than 300 channels of DirecTV satellite programming and 50 channels of commercial-free radio.
MIDDLETOWN, Rhode Island (Reuters) -- Satellite communications company KVH Industries hopes to put an end to back-seat bickering among grumpy siblings during long family car trips.
The Middletown-based company will introduce a satellite TV antenna that transmits movies, sports and news programming to sport utility vehicles (SUV), minivans, and luxury automobiles equipped with backseat entertainment systems.
Drivers throughout the continental United States can get more than 300 channels of DirecTV satellite TV movies, news, sports and live broadcast entertainment, as well as 50 channels of commercial-free radio. In the future, the antenna system will provide high-speed Internet access. DirecTV is a unit of Hughes Electronics.
Duking it out with DVD players
KVH's system will be marketed to current DirecTV subscribers, and sold through consumer electronics retailers. The antenna system will cost roughly $2,000 to $2,500, and the satellite programming will be less than $10 a month.
The satellite broadcasting service will compete against existing backseat entertainment devices, such as DVD or video players. But KVH Chief Executive Martin Kits Van Heyningen contended that live programming will be enough of a draw to entice consumers to ditch their pre-recorded videos.
"On the audio side, our research has shown that people who have CD players in the car still listen to the radio 70 percent of the time," said Kits van Heyningen, who expects to see similar patterns for visual content.
"Live programming has an incredible draw. People get tired watching the same videos over and over again. With this, they can drive to a sports event and watch the pre-game show on the way, or drive to work and listen to CNN," he said.
Delivery expected in second quarter
A report from J.D. Powers and Associates said every 2002-model SUV and mini-van offered backseat entertainment systems as options. About 96 percent of Nissan Quests, 31 percent of Ford Expeditions and 30 percent of Ford Windstars shipped with the video systems, according to J.D. Power and Associates.
KVH's 4-1/2-inch high TracVision in-motion satellite TV system, which uses phased array antenna technology, will be introduced January 9 at the Consumer Electronics Show in Las Vegas. The company will launch the product this quarter, and begin commercial delivery in the second quarter.
The company said it was still in talks with DirecTV to finalize a revenue-sharing agreement. It declined to provide a forecast for how many antenna units it planned to sell this year.
Posted January 8, 2003 at 6:23 a.m.
Cable HDTV Passing 37 Million Homes
Cable companies have launched HDTV on cable systems serving about one-third of U.S. TV households in more than 90 markets across the United States, the National Cable and Telecommunications Association reported Tuesday.
HDTV, considered to be another weapon in cable's battle with satellite TV, is being provided by at least one cable operator in 62 of the top 100 DMAs, the association said. The number of homes passed by cable systems providing HDTV is about 37 million, or one in three US TV households, NCTA said.
Cable's HDTV mix includes premium channels from HBO and Showtime as well as Discovery HD Theater. The wire also is delivering local HD content in cities where it's available to viewers.
Key HD markets for cable include New York City, Los Angeles, Ch