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SkyREPORT 08/30/2004 - DirecTV Gets Pegasus Subs, DBS Assets

SkyREPORT E-News
Mon, 30 Aug 2004 00:11:21 -0700

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SkyREPORT 08/30/2004 - DirecTV Gets Pegasus Subs, DBS Assets

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Today's Headlines:
DirecTV Gets Pegasus Subs, DBS Assets
Digital Subs Grow in Canada
Analysis: Expect More Intense Competition
Satellite-Based Home2US Aims for Niche Audiences
PEOPLE: A Promotion for Polka


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        DirecTV Gets Pegasus Subs, DBS Assets


As expected, DirecTV completed the acquisition of DBS assets 
controlled by Pegasus Satellite Television, which includes 
rights to all DirecTV subscribers activated through Pegasus in
its rural territories.

The move made Friday follows Maine bankruptcy court approval of
a settlement between DirecTV, Pegasus and the National Rural 
Telecommunications Cooperative. Pegasus sold DirecTV in rural 
areas through its NRTC affiliates in 41 states.

The sale of Pegasus Satellite's assets to DirecTV totaled $938
million, including $875 million in cash.

DirecTV said it expects to complete the migration of Pegasus 
customers to DirecTV within 30 to 45 days. The satellite TV 
company said it's working with Pegasus to ensure a seamless 
migration of customers to its service, and DirecTV customers in
Pegasus territories will continue to receive uninterrupted 
service during the transition process.

Pegasus had about 1.08 million customers as of June 1.

A number of Pegasus subsidiaries, including Pegasus Satellite
Television, filed for Chapter 11 bankruptcy in June. On Aug. 2,
DirecTV and Pegasus announced an agreement that would allow the satellite TV company 
to purchase Pegasus' primary DBS assets.

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        Digital Subs Grow in Canada


Canada's pay-TV distributors added slightly more net digital TV
subscribers in the first quarter compared to the same period 
last year, according to new research from Ottawa-based Decima
Research.

The number of Canadian households subscribing to digital TV 
subscription services increased by an estimated 3 percent, or 
about 113,582, in the first quarter (November/December 2003 to
February/March 2004), compared to an estimated 3 percent or 
about 102,432 for the previous year (November/December 2002 to
February/March 2003), Decima said. The number of digital TV 
subscribers in Canada topped an estimated 3.9 million as of 
February/March, representing a year-over-year increase of an 
estimated 12 percent or about 428,618 subscribers, the research
firm said.

The number of Canadian satellite TV subscribers increased by 1
percent, or 22,483, during the first quarter, compared to 1 
percent, or 30,041, recorded for the same period last year, 
Decima said. Digital cable subscribers in Canada increased by 
an estimated 5 percent, or about 83,921, in first quarter 2004,
compared to an estimated 6 percent, or about 71,819, in first 
quarter 2003.

The latest digital TV subscriber numbers are contained in the 
latest installment of Decima's quarterly digital TV market 
overview report series, titled "The Digital Domain: Tracking 
the Growth and Development of the Canadian Digital TV 
Distribution Market." For more on the report, visit
http://www.thedigitaldomain.ca.

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        Analysis: Expect More Intense Competition


The competitive landscape for pay-TV is expected to get more 
intense, says one research firm.

Vamsi Sistla, director of broadband and residential 
entertainment technologies at ABI Research, says competing 
platforms have created more choice within the pay-TV market. 
"Consumers no longer think, 'my house is already wired for 
cable, that's what I'll use'," he said.

"Leading service providers are already partnering with builders
to include a fiber option in new homes. The same goes for 
satellite operators," Sistla says, adding that the increased 
variety gives subscribers leverage to negotiate better deals, 
and puts price pressure on operators.

A study from ABI Research, "Video Subscribers: Cable, DBS, 
Terrestrial and IP Systems" examines global trends in 
subscriber growth across the major video platforms, and takes a
look at advanced features such as video-on-demand, PVRs and HD.
The report suggests that by 2009, DBS will claim more than 
twice the worldwide market share of digital cable, while the 
cable industry will still maintain a lead over DBS in North 
America. 

Another challenge for providers in this environment is churn, 
Sistla says. With so many options, consumers are more likely 
to frequently change platforms or service providers.

"It's now harder, but more important, for operators to create 
'stickiness' in subscribers," Sistla says. "High quality and 
variety of content isn't enough any more. What got video 
providers this far will not carry them into the future. They 
have to differentiate themselves. They may achieve that by 
strategies such as bundling, or by top-notch customer service, 
or by frequent special promotions and incentives for continued
loyalty."

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        Satellite-Based Home2US Aims for Niche Audiences


Please welcome the latest satellite-based satellite TV platform
to serve niche U.S. audiences.

Home2US Communications, based in Herndon, Va., is operating an
open pay television platform, and is using SES Americom's AMC-4
satellite for its service. Home2US said it will enable 
international broadcasters to distribute prime television 
channels to ethnic audiences across the United States.

As part of its debut, Home2US said it signed an agreement with
Viaccess, a France Telecom company, for conditional access 
technology.

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        PEOPLE: A Promotion for Polka


The American Cable Association, which represents small cable 
operators, promoted Matt Polka president and chief executive 
officer. ACA Chairman Jim Gleason, president of New Wave 
Communications, said the promotion and related staff growth 
come as a "direct result of the positive gains already made by
ACA and a strategic effort to provide the organization and its
members with the support to further ACA's mission as Congress 
begins rewriting current telecommunications laws in 2005."

Gordon Joins BET - Donovan Gordon, a former executive with
Showtime, joined BET as senior vice president of affiliate
sales and marketing. Gordon will replace Lee Chaffin, who
left the network last spring to pursue other business
interests.

McMullen to Head OutQ - Sirius Satellite Radio named John 
McMullen station manager for Sirius OutQ, the full-time talk 
radio channel dedicated to the gay/lesbian/bisexual/transgender
community. As station manager, McMullen will develop 
partnerships with other media, organizations and individuals.
And he will continue to host his popular Sirius OutQ radio
show, The John McMullen Show, which airs weekdays at 11 a.m.
Eastern.

Huguez Joins Starz - Edward Huguez was named executive vice 
president, sales, for Starz. Huguez comes to Starz from 
Midstream Technologies, where he served for three years as 
president, CEO and chairman. Midstream is a Seattle-based 
company that provides interactive and video-on-demand 
technology to cable companies.

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