Hughes Electronics unveiled a major restructuring of its business Thursday, selling its satellite manufacturing arm to Boeing and holding onto its gem, DirecTV, along with other consumer and commercial services. Michael T. Smith, chairman and CEO of Hughes, said the strategic moves "concentrate us into a services business." Asked about any potential spin-off, Smith said, "We don't need a spin off. We are spun off." Under the company's new structure, the Hughes Consumer Sector will have DirecTV, Galaxy Latin America, DirecTV Japan, and consumer marketing applications for DirecPC and the developing Spaceway broadband platform. The second business, the Hughes Enterprise Sector, will include Hughes Network Systems, PanAmSat and enterprise applications for DirecPC and Spaceway. As for the satellite business, Boeing will acquire those assets in an all-cash transaction valued at $3.75 billion. The deal between the two companies has been rumored all week. Included in the Boeing acquisition are: Hughes Space and Communications, the world's top manufacturer of communications satellites; Hughes Electron Dynamics, a supplier of electronic components for satellites; and Spectrolab, which builds solar cells and panels for satellites. The new company structure came along with promotions. Eddy Hartenstein, corporate senior vice president of Hughes and DirecTV president, is being promoted to corporate senior executive vice president of the Hughes Consumer Sector. The DirecTV president role will be filled by another person, but Smith wouldn't release a name. The new president will report to Hartenstein. Jack Shaw, corporate executive vice president of Hughes and chairman and CEO of Hughes Network Systems, is being promoted to corporate senior executive vice president of the Hughes Enterprise Sector. Shaw will be succeeded by Pradman Kaul, who is being promoted chairman and CEO of Hughes Network Systems. Along with those announcements, Hughes said it will narrow the focus of its wireless business at HNS. The unit will focus on broadband point-to-multipoint products and discontinue its mobile cellular and narrowband local loop product lines. Because of that change, Hughes will record a fourth quarter pre-tax charge of about $275 million.

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SHVIA Implementation Needs Clear Terms

Committee staffers from both sides of the aisle on the Senate Commerce Committee agreed that the Satellite Home Viewer Improvement Act (SHVIA) is not a cure all, but rather a step in the right direction for consumers. Those staffers and Washington, D.C.,-based satellite interests gathering for an informal discussion Thursday also agreed that successful implementation of SHVIA depends upon the clarity that results from the various rulemakings and studies the Federal Communications Commission was directed to undertake. More than 600 calls have come into the FCC seeking clarification of SHVIA since President Clinton signed the bill into law in November, an agency representative said. The FCC has met, and has vowed to continue meeting, tight deadlines for rulemakings called for in the law. Notices of Proposed Rulemakings have already been issued for defining terms for retransmission consent and for rules on syndicated exclusivity, network non-duplication, and sports blackouts. Clearly defining key terms such as "good faith" negotiations, and "competitive marketplace considerations" will be critical to the final outcome of SHVIA. The FCC expects to issue two more rulemakings shortly, out of the dozen or so mandated by the law. According to staff for Senate Commerce Committee Chairman John McCain (R-Ariz.), the lawmaker didn't sign on to SHVIA primarily for two reasons: 1) the bill wouldn't avoid more subscriber terminations, and 2) the bill didn't call for the improvement of the signal reception standard. While not opposed to the authorization of local-into-local, a Senate Commerce Committee staffer said recently that the bill fails in the details, especially with respect to the six month "shot clock" imposed for the negotiation of retransmission consent deals with the broadcasters. A staffer for Senate Commerce Committee Ranking Member Ernest F. Hollings (D-S.C.) acknowledged that competition will not completely blossom under SHVIA, but said that the legislation is a first step toward creating more competition in the multichannel video provider market.

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Canal Plus-Lagardere Finalize Marriage

France's Canal Plus and Lagardere Group completed an alliance Thursday that will make Lagardere a partner in the country's top digital satellite TV service. The deal also will marry the companies' theme channel expertise. Canal Plus's chairman Pierre Lescure told Reuters the accord opens the door to other partnership projects in the future. "When you talk about an alliance, that means the potential to cooperate knows no limit," he said. He compared the deal to the landmark merger between America Online and Time Warner. Until recently, Lagardere was a mish-mash of defense and media interests. Canal Plus pioneered pay television in France. As part of the deal, Lagardere will spend roughly 5.8 billion francs to buy 34 percent of CanalSatellite. It is also taking a 27.42 percent stake in Multithematiques, Canal's theme channel, bringing the price of the deal to just over seven billion francs ($1.098 billion U.S.), most of which will be paid in cash.

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FCC Restraint Urged In DTH Work

The Association of Local Television Stations (ALTV) is urging the Federal Communications Commission to refrain from adopting what it said could be "detailed intrusive rules" that will govern retransmission negotiations between satellite carriers and local stations. In statements filed earlier this week, ALTV expressed concern that the commission may appear to "don the striped shirt of a referee, menacingly grasping for the yellow flag in its pocket, and range freely amidst and within retransmission consent negotiations, ready to penalize the slightest flinch as 'illegal procedure.'" The ALTV, which represents stations not affiliated with the three established networks, asked the FCC to adopt broad, general rules that conform to statutory prohibitions. It also asked for FCC oversight of the negotiation process. ALTV's comments were filed in response to the FCC's proposals to implement provisions of the Satellite Home Viewer Improvement Act (SHVIA). Some of those measures require local stations to negotiate in good faith with satellite carriers and other mulitchannel video program distributors for carriage.

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PROGRAMMING: Bad News For New Networks