Primestar’s cable owners will get $1.1 billion in cash and 4.8 million shares of General Motors Class H common in return for 160-channel medium-power TV service transmitted from satellite at 85 degrees W. Hughes will pay $500 million cash for Tempo assets, which include DBS slot and 2 satellites. Hughes won’t assume any of Primestar’s $350 million debt, which will remain responsibility of cable owners. Purchase price works out to just under $600 per subscriber. DirecTV is planning to offer high-definition transmissions, interactive and other niche services from Primestar’s DBS slot at 119 degrees W. Hughes Chmn.-CEO Michael Smith said that deal will allow DirecTV to change landscape of American video entertainment and that company is “well positioned” to compete against cable. Deal, which must be approved by General Motors board, would boost channel capacity, expand distribution presence into rural and small markets, provide coverage from all 3 full CONUS DBS slots — 101 degrees, 110 degrees, 119 degrees W. With new satellite network, DirecTV is projected to have $300-$400 million operating profit and $5 billion in revenues based on having 9 million subscribers by 2000, Smith said. DirecTV, which is expected to close on $1.2 billion purchase of U.S. Satellite Bcstg. (USSB) by spring, is interested primarily in Primestar’s Tempo DBS license, less so in medium-power leases at 85 degrees W other than to provide additional capacity for HDTV programming, sources said. DirecTV will operate 90 channels at 119 degrees W and expects to provide HDTV from that location following close of deal. It also plans to use 119 degrees slot for interactive services including those stemming from recent alliances with Philips/TiVo and Wink. It now will share 119 degrees satellite with EchoStar, which controls remaining 21 transponders at that location. In conference call with analysts, DirecTV Pres. Eddy Hartenstein said 119 degrees W slot will be important to company. Following USSB acquisition, DirecTV will control all 32 transponders at 101 degrees W and 3 at 110 degrees W. “We’ll be offering a platform that extends to 110 degrees, and [119 degrees] makes sense since it is centrally located,” Hartenstein said. Despite 18 degrees spread among 3 satellites, he said it’s “technically feasible” to receive services from all 3 using single 18″ dish. Acquisition concludes talks that began nearly 2 years ago, but cooled after Primestar proposed $1.1 billion merger that would give it access to News Corp./MCIWorldCom’s license for satellite slot at 110 degrees W and allow it to switch to high-power service. Negotiations rekindled last fall after Primestar scrapped plans for acquiring News Corp. slot in face of Justice Dept. antitrust suit filed last May. Primestar CEO Carl Vogel said company might have remained afloat if not for failure to launch high-power service. “For many years, we have attempted to find ways to offer our customer base a high-power alternative,” he said. “We clearly would have preferred to launch our own service but, despite our best efforts, we were unable to do so.” Companies have formed transition team, and Hartenstein said it was too soon to determine whether any Primestar executives would join DirecTV. If deal doesn’t close, Primestar said, it will continue to operate medium-power business and might have to refinance some debt. DirecTV is planning to operate medium-power business, which uses larger dish, for about 2 years before switching Primestar customers to its high-power service with 18″ dish. Hartenstein said company isn’t “planning to do anything to disenfranchise” Primestar subscribers. He said DirecTV would continue equipment leasing program and would offer packages that meet or exceed Primestar’s current offerings. Primestar subscribers receive 160 channels of programming. National Rural Telecom Cooperative (NRTC) congratulated DirecTV on deal and said it’s excited about joining it in effort to extend service to mostly rural Primestar subscribers. Challenge remains in execution of business plan, said Bear, Stearns analyst Vijay Jayant. He said time will tell whether deal was good move for DirecTV. Deal could boost subscriber rolls to more than 7 million after completion of USSB deal, DirecTV said. Sole DBS competitor EchoStar just passed 2 million. In larger multichannel market, DirecTV would be in 3rd place behind cable MSOs TCI (14.3 million subscribers) and Time Warner (12.4 million). Benefits of transaction, expected to close by midyear, include 2 additional high-power satellites. DirecTV already has 2 in orbit and is set to deploy 3rd this year. One Tempo satellite is on ground, but Hartenstein said it could be launched as backup. On-orbit Tempo satellite experienced problems, but has been stable for 18 months, he said, and has enough capacity to operate more than current 18- transponder payload that could allow DirecTV to offer up to 370 channels of programming. Transaction requires license transfer for 119 degrees W and DirecTV will file application with FCC in couple of days, Hartenstein said. Acquisition of 119 degrees means that customers will be able to receive high-definition transmissions without purchasing elliptical dish. New equipment will be required, but Hartenstein said it will be priced comparably with current system. Current dish looks only at 101 degrees W, and set-tops will need new software.

DIRECTV Broadband has earned distinction for being the first residential DSL provider to offer a plug-and-play model of DSL, for its award-winning, proprietary gateway, and for being the first residential DSL provider to offer enhanced services such as the Connect & Protect(TM) home networking package to its customers.

As part of the marketing campaign, new customers will receive the first three months of service at the introductory price of $19.99 per month. Following the introductory period, the pricing returns to the regular $49.99 per month.

“With this lawsuit we are sending Mr. Rosenberg a very clear message: using an illegally modified access card to receive DIRECTV programming is stealing and it violates federal law,” said Larry Rissler, vice president of Signal Integrity for DIRECTV, Inc. “We have the transcript of the program and Mr. Rosenberg’s brazen comments on national television of stealing DIRECTV programming were a clear admission of wrongdoing.”

About DIRECTV Broadband, Inc.

Building upon the “FEEL THE JOY(TM)” theme of DIRECTV’s current marketing campaigns, DIRECTV Broadband, Inc., announced today the launch of its first integrated advertising campaign including a national television commercial for the DIRECTV DSL(TM) service. Coupled with an upcoming launch of a nationwide retail sales program, the advertising campaign makes an aggressive effort by the high-speed Internet company to establish itself as one of the leading nationwide providers in the industry. DIRECTV Broadband, formerly known as Telocity, was acquired by Hughes Electronics Corp. (NYSE: GMH) in April of this year.

“Frankly, as a member of the media, we were shocked at Mr. Rosenberg’s reckless and irresponsible comments,” Rissler added. “He was encouraging consumers to steal copyrighted broadcasts, such as programming owned by Viacom, the parent company of CBS/Infinity, which owns WFAN.”

DIRECTV DSL(TM) will be promoted in national and local market television, local market radio commercials, direct mail, and e-mail campaigns.

DIRECTV, Inc. announced today that it has filed a lawsuit against WFAN radio personality, Sid Rosenberg, alleging violations of the Digital Millennium Copyright Act and the Federal Communications Act.

On Monday, March 11, 2002, while speaking with Don Imus on the “Imus in the Morning” program on MSNBC, Rosenberg asserted that he has used an illegally modified DIRECTV access card to steal DIRECTV(R) programming.

posted by Administrator at 9:34 am & filed under DirecTV |