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Stallions Satellite and Antenna - TV Reception Solutions

September 9, 2004

DirecTV's $1 Billion HDTV Plan

By Paul Bond, Reuters

LOS ANGELES - In an early move to corner the high-definition television market in the United States, DirecTV said Wednesday that it will spend more than $1 billion to launch four satellites with the capacity to offer every home in America more than 1,500 local and 150 national HD channels.

Construction of the first two satellites -- dubbed Spaceway 1 and Spaceway 2 -- has been under way for a few years. They will be launched early next year, with programming being offered to consumers by midyear. The two Boeing-built satellites can carry 500 local HD channels and cost DirecTV about $250 million apiece to build, launch and insure. A third Spaceway satellite also will be built as a ground spare.

DirecTV satellite antennas
DirecTV satellite antennas are seen in this undated file photo. (DirecTV/Reuters)

The construction of two additional Boeing satellites costing about $300 million apiece also is under way, with launch scheduled for early 2007. Those satellites, called DirecTV10 and DirecTV11, have the capacity for more than 1,000 additional local HD channels as well as the national channels. A ground spare also will be built.

DirecTV currently offers just nine national HD channels, and local HD is nearly nonexistent.

"These will be the most sophisticated and advanced satellites for video services ever launched," DirecTV vp communications Bob Marsocci said.

The satellites, Marsocci said, also will take interactivity up a notch whereby shopping and playing games via TV screens will be the norm, as is the case for many British Sky Broadcasting customers in Europe. BSkyB, like DirecTV, is controlled by Rupert Murdoch's News Corp.

Digital video recording also will be improved by way of the new satellites, Marsocci said. Initiatives in that realm include having video sports, weather and news highlights, customized for each consumer, delivered each morning to subscribers.

"Anytime we increase our capacity, it gives us the ability to offer new services," Marsocci said. "So it's logical we'll offer new services for DVR customers."

Although DirecTV's HD initiative is so far much bolder than satellite competitor EchoStar, analysts speculated Wednesday that it's still primarily the cable customers that DirecTV is targeting.

"The most threatened are the tier-two cable operators that are surviving on their local presence," said Sean Badding, senior analyst at the Carmel Group. "There's always been speculation that satellite wouldn't be able to compete with cable on HD. This puts satellite back in the limelight."

Badding said the cost of deploying the new satellites, while substantial, is the right move.

"They don't have any choice. Consumer interest in HD will continue to grow as price comes down, and eventually it will be the standard offering," he said. "Since Rupert Murdoch has taken control, he's proven there's a new sheriff in town."

Reuters/Hollywood Reporter

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