- - - Industry Unites For Legislative Fight - - -

WASHINGTON - In a rare but significant show of unity, the two DBS powerhouses came together Wednesday to try to secure parity in their legislative fight against entrenched cable and broadcast interests.

At a Capitol Hill press conference sponsored by the Satellite Communications and Broadcasting Association (SBCA), DirecTV President Eddy Hartenstein and EchoStar Chairman and CEO Charlie Ergen joined Rep. Barbara Cubin (R,WY), Rep. Rick Boucher (D, VA), Rep. Mike Oxley (R, OH), and Consumers Union Co-director Gene Kimmelman in a discussion about points they said are crucial to put satellite on equal footing with its competitors.

New legislation is currently before a Congressional Conference Committee charged with reconciling the Senate and House versions of the Satellite Home Viewers Act.

The SBCA released a statement at the event that said, "When the cable monopoly was deregulated earlier this year, it was with the expectation that new legislation would enable the Direct-to-Home satellite television industry to provide consumers with a more viable competitive alternative .. We are now, however, very concerned by reports that the House-Senate Conference may fail to produce satellite legislation that will provide this much needed competition."

That concern was the glue that stuck the normally combative DBS operators together this week: a fear that special interests will tie the hands of satellite operators via proposals presented to the Conference Conference. For instance, the group said the National Association of Broadcasters is trying to enforce Grade B restrictions, full must-carry, and retransmission consent without non-discriminatory clauses. And the National Cable Television Association is lobbying to enforce full must-carry on satellite operators, and to exclude satellite from the 35-mile non-duplication rule and the retransmission phase-in period enjoyed by cable operators.

"The cable industry wants us saddled with a framework that would make it impossible for us to offer local channels," Hartenstein said via telephone. But, he added, "If there is no meaningful legislation this year, there will be an outcry across the country because this is something that affects people everyday in their homes."

- - - Hughes Lauds DirecTV Earnings - - -

DirecTV parent company Hughes Electronics Corporation (NYSE: GMH) said Wednesday third quarter revenues increased 31.5 percent to $1,990.5 million, up from $1,513.3 million this time last year.

The company's Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased 18.3 percent to $211.6 million.

Hughes Chairman and CEO Michael Smith said, "The primary driver of our revenue growth continues to be our DirecTV businesses ... We had our best third quarter ever for new DirecTV subscriber additions in the United States, Hughes Network Systems (HNS) achieved its best quarter ever for sales of DirecTV receiving equipment, and Galaxy Latin America nearly doubled its net new subscriber additions compared to the third quarter of 1998. In fact, total revenues from our services operations more than doubled compared to the third quarter of last year."

Despite DirecTV.s success, Hughes reported a third quarter net loss of $29.6 million as high acquisition costs and other expenses offset the DBS company.s robust growth.

The company said its total direct-to-home business logged third quarter revenues of $1,144.6 million compared to $459.1 million in third quarter 1998. PanAmSat, Hughes' satellite services subsidiary, also showed strong earnings. And revenues for Hughes Network Systems were up 59.2 percent to $426.2 million. However, revenues for Hughes' ICO Global Communications declined to $510.8 million from $688.9 million for third quarter 1998.

Analyst William Kidd with C.E. Unterberg Towbin said the firm continues to believe Hughes is undervalued, and maintained a year-end 1999 price target of $72. "Hughes Electronics remains our top satellite television sector pick," he said.

Shares in Hughes Electronics closed at $65.94, up $0.69 from the previous day.

- - - Motorola Forges Ahead With Iridium - - -

Speaking at the Telecom '99 Show in Switzerland Wednesday, Motorola Chairman and CEO Christopher Galvin said he continued to believe the company could improve its profits, and that talks about restructuring the bankrupt Iridium satellite telephone subsidiary are ongoing.

Motorola, Iridium's primary backer and the second largest wireless telephone maker in the world, reported third-quarter sales of $7.7 billion this week, a seven percent increase from third quarter 1999.

"We continue to believe in the proposition of Iridium - that is for people to be able to communicate on the 90 percent of the earth's geography that is not covered by wires or cellular," Galvin said. "At the moment, from a financial standpoint, the company is in a restructuring that was precipitated by bondholders .. We are in the process of seeking a viable financial restructuring for it."

Galvin declined to give a timeframe in which Iridium's backers will develop the new financial plan.

- - - The Street Likes PanAmSat - - -

Third quarter earnings for satellite operator PanAmSat (NASDAQ:SPOT) rose 13 percent this year, bolstered by a one-time gain of $15 million from a contract cancellation fee from ISkyB, News Corp.'s Indian DTH operator.

Hughes Electronics, which also reported strong earnings, owns 81 percent of PanAmSat.

For the three months ending Sept. 30, PanAmSat reported net income of $34 million, or $0.23 a share, compared to $29.9 million, or $0.20 a share, a year ago. PanAmSat said its total third quarter earnings were $210.7 million, due in large part to increases in sales of telecommunications services.

The results were slightly higher than analysts on The Street expected. William Kidd with C.E. Unterberg Towbin reiterated the firm's Long-term Buy rating for PanAmSat and said, "We're pleased the company is operating in the parameters of our expectations."

Armand Musey with Banc of America Securities also kept his rating at a Strong Buy and predicted that PanAmSat shares will be worth $61 at year-end 2000. "We think that improving industry economics and the company's still depressed stock price justify our price target," he said.

PanAmSat stock closed Wednesday at $38.69, up $2.06 from the previous day.

- - - INTERNATIONAL: - - -

• Iraq To Allow Satellite TV Access -
  After years of prohibition, the Iraqi government has decided to allow restricted access to a number of satellite television channels, according to the Associated Press. The Ministry of Culture and Information will supervise the subscription service. Government sources did not disclose how Iraq - which is still under U.N. sanctions imposed after its 1990 invasion of Kuwait - would acquire the satellite equipment.

• SoftNet, Pacific Century Form International Venture -
  SoftNet Systems and Pacific Century CyberWorks have announced a strategic investment and joint venture to collaborate on broadband Internet, cable modem and satellite projects. Under the agreement, Hong Kong-based Pacific Century will invest $129 million to purchase 5 million shares of SoftNet, which is based in San Francisco.

• PanAmSat To Carry Portuguese Programming -
  PanAmSat's PAS-5 Atlantic Ocean Region satellite will deliver Portuguese public broadcaster RTP International to television audiences throughout the Americas. The service, which will consist of Portuguese-language television programming, will launch from PanAmSat's London platform for digital broadcast transmissions.

• British Get Taste of Interactive TV -
  The British company Kingston Communications will launch a new digital interactive television service using digital-subscriber-line (DSL) technology. The initial service launch is planned for late October. And BSkyB, the U.K.'s digital satellite TV company, launched its Open TV interactive solution this week. It will allow viewers to use their television to shop, bank, send e-mail or surf the Web.