ECHOSTAR GEARS UP FOR TAKEOVER, CHIDES DISNEY
LAS VEGAS -- As EchoStar gears up for proposed acquisition of Hughes Electronics and DirecTV, it expects to have set-top box (STB) by spring capable of receiving rival’s service. Pro 301 will ship as EchoStar receiver but WILL contain 4 MB of memory for DirecTV’s advanced program guide and it will be modified to handle its satellite switching, Senior Vp Mark Jackson said at CES here. Final detail, should $26 billion deal be approved, would be for DirecTV to transfer source code to box via software download to receiver’s flash memory, Jackson said in interview Wed.
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Pro 301 ($199) features interactive program guide based on OpenTV’s platform that includes, among other things, instant weather. It also has faster processor than previous- generation product and offers 2 electronic program guide options including full screen that displays 6 lines of channel listings and picture-in-guide, half-screen display with 4 lines. “We'll just start shipping our regular boxes, but with added memory for DirecTV so that the transition, should the deal go through, is smooth,” Jackson said: “Ultimately the box will work with either system and all they [DirecTV] have to do is give us the codes.”
Meanwhile, hearing in U.S. Dist. Court, L.A., scheduled for today (Thurs.) in Disney’s breach of contract suit against EchoStar was postponed. New date hadn’t been announced by our deadline. Federal judge has issued temporary restraining order barring EchoStar from pulling Disney’s Family Channel from its programming line-up. Disney, which acquired Family Channel from Fox in Oct., has argued that EchoStar is required under contract to carry channel through 2005. EchoStar CEO Charles Ergen said that if Disney hadn’t sought 15% increase in carriage fees for ESPN Classic that “reasonable agreement” for other channels, including Family Channel, could have been reached. He said Disney had sought increase in exchange for its agreeing to back EchoStar’s proposed takeover of DirecTV. “This was a risk to us, but I wasn’t going to pay them hush money,” Ergen said: “Maybe it will cost us the merger, but at least I'll be able to look at myself in the mirror in the morning.”
In addition to battling Disney, which provides 18 channels on EchoStar’s Dish Network, Ergen argued that without EchoStar-DirecTV deal “you won’t see satellite broadband services.” Hughes Network Systems DirecPC and Starband, in which EchoStar is investor, combined have 100,000 customers, he said. “We haven’t made any money yet and won’t unless the merger goes through because these are very expensive to operate,” he said.
Ergen also said France’s Vivendi Universal’s recent $1.5 billion investment in EchoStar “creates the concept of Sky Global.” But he said EchoStar would remain focused on N. and S. America and had no global aspirations. Vivendi is focused primarily on Europe through its Canal Plus subsidiary. News Corp. had set up Sky Global Networks in effort to establish worldwide network of satellite services. It lost battle for DirecTV to EchoStar last fall. “We don’t see ourselves as a major owner of services outside of North and South America,” Ergen said.
Meanwhile, ABC Cable Networks Group-Disney Channel Worldwide Pres. Anne Sweeney said Disney hasn’t sought increase in carriage fees from EchoStar. She said EchoStar had issued misleading statements (CD Jan 3 p3) in fight over carriage fees. Sweeney said EchoStar had benefited from its 7-year relationship with Disney when studio was one of few programmers willing to support “fledgling satellite system.”