ECHOSTAR GEARS UP FOR TAKEOVER, CHIDES DISNEY
As EchoStar gears 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 will be modified to handle its satellite switching, Senior Vp Mark Jackson said. 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 after news conference at Consumer Electronics Show in Las Vegas. EchoStar also showed prototype “tribeam” receiving dish with 3 LNBs that would allow service to receive programming from its satellites at 119? and 110? W. and DirecTV’s at 101?.
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Pro 301 ($199) features interactive program guide based on OpenTV’s platform that includes, among other things, instant weather reports. 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 give us is the codes.”
Meanwhile, hearing in U.S. Dist. Court, L.A., scheduled for today in Disney’s breach of contract suit against EchoStar has been postponed; new date hadn’t been set by our deadline. Judge has issued temporary restraining order barring EchoStar from pulling Disney’s Family Channel from it programming lineup. 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, “reasonable agreement” for other channels, including Family Channel, could have been reached. Ergen argued that Disney had sought increase in exchange for its agreeing to back EchoStar’s proposed deal with 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.”
Disney was quick to counter Ergen’s comments, saying that it had “never sought” any increase in fees for Family Channel beyond those in contract EchoStar signed in 1995. But he said increase was sought for ESPN Classic, not Family Channel. Disney spokeswoman declined comment.
In addition to battling Disney, which provides 18 channels on EchoStar’s Dish Network, Ergen said that without his acquisition of DirecTV “you won’t see satellite broadband services.” Hughes Network Systems DirecPC and Starband, in which EchoStar is financial investor, combined have 100,000 customers, Ergen 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 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 has 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, EchoStar took wraps off DishPVR 508 combination satellite receiver/personal video recorder that increased hard drive capacity to 80 GB from 30 GB and boosted processor speed from 150 MHz to National Semiconductor IC that runs at 300 MHz. New combo product also shifts to Linux-based operating system and has Samsung 32 MB DRAM chip. Hard drive supplier hasn’t been chosen yet, but among those qualified are Seagate and Maxtor, sources said. Improvements in components also boost price to $499 from $399 for DishPVR 501. New model also has OpenTV’s interactive software that, in addition to weather and traffic that it started with, has been upgraded to add customer service applications, movie reviews and show times from Zap2it, horoscopes and videogames. Services will be available via Dish Home at Ch. 100 and game division, known as Playin TV, will carry $4.99 monthly fee for which subscribers get 5 games rotated on weekly basis. Among games are solitaire, bowling, golf.
EchoStar also said it would raise monthly subscription prices 3% (about $1) starting in March on both America’s Top 50 basic service ($22.99) and premium offerings that range up to $72.99 for America’s Everything package. Under new federal must- carry law, EchoStar has increased number of local channels it carries to 250 in 36 markets. Channels have been added to satellites at 61.5? W. and 148? W. pending launch of spot beam birds later this year. Spot beams satellites are to be colocated at 110? W.