ECHOSTAR, DIRECTV PUSH BENEFITS OF COMBINED COMPANY
LAS VEGAS -- With FCC decision on EchoStar’s proposed purchase of Hughes Electronics and its DirecTV subsidiary expected by fall, companies began 2-pronged attack at Satellite Bcstg. & Communications Assn. (SBCA) show here Wed., portraying combined company as best means for DBS reaching 27-30 million subscribers by 2005. EchoStar Exec. Vp James DeFranco and DirecTV Customer Satisfaction Exec. Vp Robert Meyers laid out plans for companies to fully integrate within 3 years of completing sale and enable them to offer bundled packages of video and broadband services to combat similar strategy currently being used in cable industry.
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Noting success of Cox Communications packaging video with cable modem and telephone services, DeFranco conceded broadband was one of areas that “we need to improve” to remain competitive with MSOs, which also have been rolling out digital programming. With Cox having gained 600,000 subscribers for its voice-over-cable package, DeFranco said satellite industry needed to be positioned so all services were offered from single receiver dish. “We need to package video and a high-speed solution together so that we can offer a one-stop service,” he said. DirecTV currently sells its video service separate from DirecWay satellite-based Internet access service, which thus far has attracted 133,000 subscribers. EchoStar, after investments in WildBlue and StarBand failed to provide it with broadband service, has partnered with DSL providers and is weighing other options. “We have to respond to cable’s bundling strategy across the board and the only way we can do that is by combining the companies and leveraging the assets,” DeFranco said.
Combining companies also would be key to expanding offering of high-definition (HD) programming, speakers said. EchoStar and DirecTV provide 3 and 4 HD channels, respectively, but integration of companies could boost that to 12, DeFranco said. Noting EchoStar subscribers who wanted to receive HD currently must deploy 2nd receiver dish, DeFranco said combined companies probably could develop dish that was capable of receiving signals from 4 different satellites. While HD is “bandwidth hog” that requires single transponder to transmit just 2 channels, companies eventually will provide “robust suite” of programming, Meyers said.
While DirecTV and EchoStar presented case for combining operations, some companies weren’t convinced sale was in best interests of industry. Combined company will decrease competition, especially in rural markets where there are fewer options other than satellite for getting video and broadband services, said NRTC Senior Vp Mark Brown, whose group competes with EchoStar in selling DirecTV service. NRTC has long opposed EchoStar’s purchase of DirecTV and says “competition is great for folks in rural areas” because historically it has driven “innovation” in products and services and provided lower prices, he said. “Without that competition there is no driving force for those innovations to happen” in rural regions, Brown said.