SkyREPORT.COM News Headlines
News Update For 2/03/00

DISH/DirecTV Suit-Battle For Shelf Space

EchoStar's bitterly-worded lawsuit filed against DirecTV this week contains accusations of unfair sales and distribution practices that occurred during the past several years. However, it also details threats made against DISH Network retailers as recent as last month. In January, Ultimate Electronics informed EchoStar that it would discontinue DISH Network sales after DirecTV effectively barred the regional consumer electronics chain from carrying or selling certain HDTV sets, EchoStar said in its lawsuit. Because of those threats from DirecTV, Ultimate Electronics and its SoundTrack chain "could not risk the loss of sales associated with the major manufacturers' withdrawal of their HDTV products and if it continued to carry and sell both the DISH Network system and the DirecTV system," the lawsuit stated. Ultimate Electronics, a Denver-based company that has worked extensively with EchoStar, prides itself on promoting and selling emerging electronics such as HDTV and DBS. Last year, it cleared DirecTV from its sales floor. EchoStar also complained that DirecTV punishes retailers for carrying DISH Network. In its suit, EchoStar said DirecTV retaliated against Sears last spring after the retail giant refused to stop selling DISH Network. "DirecTV terminated its relationship with Sears, barred it from continuing to arrange the sale of DirecTV service, cut off its supply of DirecTV-compatible equipment, and, upon information and belief, has stiffed Sears on amounts due from its prior sales of DirecTV equipment and services," EchoStar said. EchoStar alleged that DirecTV pays retailers to keep DISH Network away from store shelves. The company said that after it came to terms with Best Buy and Circuit City to sell DISH Network services, DirecTV offered the two chains cash payments and other inducements "to boycott DISH Network and to refuse to sell DISH Network service and equipment." Jim DeFranco, executive vice president at EchoStar, said the company "is willing to compete with anyone, but customers that walk into Circuit City and Best Buy cannot choose the satellite TV system ranked No. 1 in a customer satisfaction study by J.D. Power and Associates. "We cannot be silent when companies like DirecTV and RCA decide to keep our product out of stores. We want the consumer to choose which product is best." Wall Street showed little reaction to the lawsuit. One analyst, William Kidd of C.E., Unterberg, Towbin, said, "Although a number of EchoStar's claims ring true to our ears, the lawsuit still comes as a surprise since EchoStar gained tremendous ground against DirecTV on a market share basis in recent months." Hughes Electronics, parent of DirecTV, closed down more than $5 to $109.25. EchoStar fell slightly to $86.31.

Congress Weighs In On Good Faith Provision

WASHINGTON, D.C. - Congressional members voiced their opinion on the controversial "good faith" provision governing retransmission consent negotiations in new DTH rules, sending a letter to the Federal Communications Commission outlining their concerns. In the letter, lawmakers said they are "troubled by the direction the commission appears to be taking with respect to its role in determining what is a 'good faith' negotiation of retransmission consent agreements between a broadcast station and satellite carriers." The FCC is currently taking comments on the "good faith" provision. Lawmakers who signed the letter include Reps. Henry Hyde, Howard Coble and Billy Tauzin and Sens. Patrick Leahy, Orrin Hatch and Ted Stevens. "We did not envision a laundry list of responsibilities or a cookbook of regulations for market-by-market price controls," the letter said. "Such administrative overreaching not only undermines Congressional intent, but also the authority of the commission, and should be avoided."

Global Companies Set Up US Shops

Two global satellite providers, Telesat Canada and Europe's Eutelsat, are open for business in the United States. On Wednesday, Telesat Canada unveiled its plans for a U.S. sales division, which will offer domestic and international satellite transmission services for broadcasters, cable companies, telecommunications resellers and others. Telesat is partnering with InSight Telecommunications, a broadband content delivery company, for the effort. Dennis Billard, vice president of business development at Telesat, said the Telesat/Insight combination is a natural fit for the two companies. "It's been a long relationship between the two companies. We have been working with the crew at Insight over a long period of time, for 12 to 15 years," he said. Boston-based InSight provides project management and packaging of transmission services. It uses satellite transponders, fiber-optic circuits and other technologies to deliver content for clients such as Major League Baseball and others. The U.S.-based division, Telesat Communications Services, will be headquartered in Boston and will have offices in Atlanta and Los Angeles. Telesat will serve U.S. clients through two satellites, Anik E2 and Anik E1. The Ottawa-based company also plans to serve U.S. customers from Anik F1, scheduled to launch in the fall. In another development, the Federal Communications Commission authorized the first licenses accessing EUTELSAT satellite capacity from within the United States. EUTELSAT services that customers can hook up to include IP broadband and video contributions. The FCC made the announcement this week. BT North America and Group W Network-CBS Broadcasting are the first two companies authorized for uplinks to EUTELSAT. In addition to North America, Paris-based EUTELSAT delivers satellite services throughout Europe, parts of Africa and the Middle East. Both companies made their announcements at this week's Satellite 2000 Conference in Washington, D.C.

A News Corp/BSkyB/Nokia Connection?

News Corp. is in serious talks with the world's largest cellular phone manufacturer about a possible business connection that could involve its European gem, British Sky Broadcasting. Finland's Nokia confirmed this week that it has held "exploratory discussions with News Corp. about how a content provider and a telecoms equipment manufacturer could cooperate." Speculation is that any partnership with the Scandinavian cellular phone giant will involve BSkyB, which is expanding into continental Europe. American Depositary Receipts for BSkyB, traded on the New York Stock Exchange, continued their meteoric climb Wednesday, closing up $3 to $145. In other BSkyB developments, the European Commission has asked the satellite/programmer for more information surrounding its planned $1.44 billion deal with Kirch Group's digital pay-TV service. The request delayed this week's hearing on the matter. BSkyB is planning to purchase a quarter of the KirchPayTV service based in Germany.

INTL: Globalstar Expands Coverage