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SkyREPORT 08/03/2004 - Sides Comment on DirecTV/Pegasus Resolution

SkyREPORT E-News
Tue, 03 Aug 2004 00:17:11 -0700

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SkyREPORT 08/03/2004 - Sides Comment on DirecTV/Pegasus Resolution

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Today's Headlines:
Sides Comment on DirecTV/Pegasus Resolution
NDS: Deal Soon with DirecTV on DVRs
Station Loses Must Carry Request Vs. DirecTV
Northern Sky: Satellite Capacity Demand to Grow
TECHNOLOGY: WildBlue Gets Back Office in Order


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        Sides Comment on DirecTV/Pegasus Resolution


After two months of legal wrangling in Maine federal courts, 
and after nearly five years of overall litigation between the
sides, Pegasus and DirecTV agreed to end their skirmish Monday
in a deal that will allow the satellite TV service to obtain 
Pegasus' subscribers in rural areas.

DirecTV said it will pay $875 million in cash, subject to 
certain adjustments, for Pegasus' DBS assets, including 
subscribers acquired through Pegasus' National Rural 
Telecommunications Cooperative affiliates. The payment reflects
the dismissal of all claims between the parties, including a
$63 million judgment entered in May in favor of DirecTV against
Pegasus, the satellite TV company said.

Taking into account the judgment, the aggregate price is about
$938 million.

Chase Carey, president and CEO of DirecTV, said, "This 
agreement gives DirecTV a true ability to reach every home in 
America. DirecTV will have unencumbered access to an additional
10 million households and will be able to offer consumers in
those rural markets the full benefits of DirecTV programming,
pricing and service."

Carey said the number of DirecTV subscribers in rural areas has
declined during the past few years, "and this will enable us to
reverse that trend and grow our subscriber base in these areas
going forward." He added, "This transaction also has 
significant financial benefits including significant increased
short-term cash flow and long-term value from both increased 
subscribers and cash flow."

Pegasus CEO Marshall Pagon said the deal with DirecTV will 
allow for a quick resolution of Pegasus Satellite Television's
case in Maine bankruptcy court. "Most importantly, these
agreements assure that Pegasus Satellite Television's over 1
million subscribers throughout the U.S. will continue to
receive uninterrupted delivery of DirecTV programming and that
the sale to DirecTV will be managed smoothly and without
disruption of their satellite service," Pagon added.

Pagon also thanked employees and management for their hard
work. "In little over 10 years, and in defiance of widespread
skepticism that satellite television could ever successfully
compete with cable, they built a sound and successful business
serving over 1 million rural subscribers in 41 states," he
said.

The NRTC said it was happy DirecTV and Pegasus came to a deal.
This was the last step in finalizing the agreement between
NRTC and DirecTV that will terminate their joint DBS sales
effort - which was first announced June 1 - and ends all
litigation among the parties, the cooperative said.

Said NRTC President and CEO Bob Phillips. "Every one of our
DBS members has chosen to quantify the great value in the
businesses they've built over the last decade by accepting
this deal, and the vast majority of them have also decided to
continue on as retailers and services of DirecTV to our 
subscribers."

The June 1 agreement ends the original NRTC/DirecTV contract,
and compensates NRTC DBS members for ending their exclusive
territorial rights for selling the satellite TV service, while
allowing them to continue to sell DirecTV through different
options. Pegasus faced an Aug. 31 deadline for termination of
the original NRTC/DirecTV DBS sales deal.

In addition to the DirecTV deal, Pegasus and a committee of
unsecured creditors working on Pegasus Satellite's bankruptcy
reached an agreement on the sale of TV stations owned by
Pegasus Satellite to Pegasus Communications, subject to higher
and better offers. The sale of the satellite TV assets and
settlement with DirecTV as well as the sale of the TV stations
are subject to bankruptcy court approval and applicable
antitrust filings and approvals.

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        NDS: Deal Soon with DirecTV on DVRs


NDS Group, News Corp.'s TV technology unit, said it's closer
to getting DirecTV on board with its services, including a
digital video recorder product.

NDS President and CEO Abe Peled said Monday that an agreement 
with DirecTV has not yet been signed, but added he soon expects
a deal with the satellite TV company that will put NDS' XTV
DVR into DirecTV set-top boxes, with shipments beginning in
first quarter 2005. Also, some of NDS' middleware products may
appear in DirecTV systems sometime in the fourth quarter,
Peled said.

Peled said NDS has been "spending heavily" on middleware and
the XTV digital recorder product for DirecTV, and that the 
company has made "Significant progress" in developing new 
technology for the satellite TV company.

News about the XTV DVR in future DirecTV set-top boxes sent 
TiVo's stock down more than 5 percent to $5.34 Monday. TiVo 
supplies DirecTV with DVRs, and has generated most of its 
subscriptions from DirecTV's service.

DirecTV has said in the past it plans to continue using TiVo,
though comment wasn't available from the company concerning
NDS Monday.

In addition to NDS, News Corp. also controls DirecTV.

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        Station Loses Must Carry Request Vs. DirecTV


The Media Bureau at the Federal Communications Commission 
denied a petition for reconsideration filed by Family Stations,
Inc. concerning a request for carriage of one of the company's
TV stations by DirecTV.

The issue involves Family Stations of New Jersey, licensee of
non-commercial, educational television station WFME-TV. The
station was denied must-carry status on DirecTV for the
satellite TV company's local TV service into the New York DMA.

According to the FCC order on the matter, DirecTV said WFME 
failed to make a proper must carry request by July 1, 2001. 
The station's owners deny the charge, saying it made a request
in a timely matter and that DirecTV was aware of its request.

Nonetheless, the FCC denied the petition from the station and 
its owners, saying the station cited no special circumstances
to distinguish its failure to follow the rules.

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        Northern Sky: Satellite Capacity Demand to Grow


Demand for commercial satellite capacity could grow at 4.8 
percent each year during the next few years, driven by 
satellite TV (or DTH) services, satellite broadband and HD 
channels, according to a new market survey from Northern Sky
Research.

The firm's research, titled "Global Assessment of Satellite
Demand," evaluates demand for C-Band, Ku-Band and Ka-Band
satellite transponder capacity, including seven specific
satellite applications in 12 regional markets.

Northern Sky says that, on a global basis, the number of
leased C-Band and Ku-Band transponder equivalents will
increase from 4,058 in 2003 to nearly 5,383 in 2009. This
represents an average annual growth rate of 4.8 percent, with
a large share of the growth coming from expanding DTH services,
an emerging satellite broadband market and broadcast of more
HD channels for pay TV services and free-to-air programming,
the firm says.

The commercial Ka-Band market has yet to develop in a 
significant manner, Northern Sky says. However, the firm 
believes Ka-Band's potential will change in the near term with
the launch of new services. Demand for Ka-Band capacity is
anticipated to grow at an average year-on-year rate of 41.1
percent during the forecast period, the company says.

Increasing transponder demand also will drive more revenues
from leased commercial satellite capacity. Northern Sky
forecasts that revenues for leased C-Band and Ku-Band
transponders will chalk up a 3.9 percent average annual growth
rate.

For more on Northern Sky, visit:
http://www.northernskyresearch.com.

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        TECHNOLOGY: WildBlue Gets Back Office in Order


WildBlue Communications said Convergys will supply Infinys 
software to support order entry, billing and customer 
management for the launch of its satellite-delivered high 
speed data service. Also, Interactive Enterprise, a company 
that develops and markets broadband provisioning and service 
activation software, will provide a wireless version of its 
Open Conexon platform. And Incognito Software will provide 
WildBlue with the Broadband Command Center product, an 
integrated device-provisioning suite that will support the 
service, the satellite broadband company said.

Broadwing Gets Ascent - Broadwing Communications, a subsidiary
of Corvis Corporation, announced that Ascent Media Network 
Services signed a three-year agreement for real-time video and
file transfers over its Media Services Network. The network
will enhance and expand Ascent's ability to provide customers
with real-time video and file transfers between New York,
Minneapolis and Los Angeles facilities, the company said.

SES Wins Crawford Deal - Last week, SES Americom announced a
strategic, multi-year agreement with Atlanta-based Crawford 
Communications designed to deliver a one-stop solution for 
innovative program production and broad distribution within 
its advanced HD-Prime cable neighborhood. Crawford originates
32 full-time TV channels and produces programming distributed
in the United States and around the world.

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