NEW YORK - DirecTV's take rates for local channel packages are exceeding 50 percent for a select number of markets the DBS provider serves. Eddy Hartenstein, DirecTV president and recently-named corporate senior executive vice president for Hughes' consumer sector, said those take rates are quickly approaching 60 percent. He pointed out that the high take rates were recorded during a free preview of local channels. Strong reception to local TV channels are coming from DirecTV subscribers living in Denver, Washington, D.C., and Atlanta, Hartenstein said. He made his comments at Merrill Lynch's satellite conference Wednesday. DirecTV's acquisition of 120,000 net new subscribers in January also is an indication of the company's success with local channels and the enrollment of new customers, he said. DirecTV made those record gains last month despite what Hartenstein called a "product starved" start for 2000. He said product supply issues were worked out in early February with DirecTV's top two manufacturing partners, Hughes Network Systems and Thomson. EchoStar's DISH Network experienced similar product issues in January. Hartenstein also commented on the lawsuit EchoStar filed against DirecTV last week. He said there is no merit to EchoStar's allegations that his company is acting unlawfully when working deals with retail and manufacturing partners. "The truth is that we have endured a lot of misleading statements from EchoStar," Hartenstein said. Hartenstein suggested EchoStar's complaints "are an outgrowth of its own business strategy that undermines" retailers and distributors. While DBS gained a lot of attention at the Merrill Lynch conference, broadband was the real focus at the one-day event. Companies sharing that spotlight included SES-ASTRA, Gilat and iSKY. Pegasus Chairman Marshall Pagon made a pitch for the company's move into delivering broadband services to rural areas, saying satellite has the only solution for providing next-generation offerings in remote regions.

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Rural Loan Program: Round II Of Hearings

WASHINGTON, D.C. - Four senators and the Director of the Congressional Budget Office (CBO) testified before the Senate Banking Committee Wednesday on structuring a loan guarantee program for the delivery of local stations to rural America. In the second Senate Banking Committee hearing in as many weeks on the subject of rural loans, Committee Chairman Phil Gramm (R-Texas) said he expects to have a report out of his committee by the end of this month, much sooner than the March 31 deadline Gramm promised at the outset of the hearings process. The witness panel of senators told the Committee that ensuring their rural constituents have access to local TV signals is an important issue. Sen. Tim Hutchinson (R-Ark.) said, "satellite technology is an efficient way to deliver local signals. "Americans should have access to the best technology available no matter where they live," Hutchinson said. Arkansas Democrat Blanche Lambert-Lincoln agreed that maximizing coverage in rural parts of her state is the key issue. Rather than seeking to provide competition to cable Lincoln said, "we need to take this opportunity to act to ensure the largest amount of coverage possible for the money spent on the program." Banking Committee Sen. Michael Enzi (R-Wyo.) said he is also seeking "equality of access" for his constituents, echoing panelist and fellow Wyoming Republican Craig Thomas. "America's ingenuity creates novelties that often become necessity, from the mail service, electricity, phone service, and now television," Enzi said, adding that, "the more rural a person is, the more important it becomes for that person to have access to critical information." Enzi also acknowledged Wyoming Rep. Barbara Cubin for her work in the House on this issue. CBO Director Dan Crippen said there could be a high default risk for the rural loan guarantee program, due primarily to financial and technological risks involved. To be successful, Providers would need to achieve a high penetration rate in a small potential subscriber base, Crippen said. CBO estimates that an up-front federal appropriation of between $300-$350 million would be necessary for a rural loan amount of $1.25 billion. The risk to taxpayers could be reduced, Crippen said, if the loan amount is reduced, the amount that the federal government is responsible for covering is reduced, and by stipulating that the government portion would be paid off first if the loan defaults. "Private capital, putting the taxpayer first in a claim situation, and not covering 100 percent of the loan are all incentives to make the program work," Gramm said. "We're willing to accept some risk to provide these services, and by lowering that risk, we'll have a better chance for a successful program."

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House Panel Takes A Shot At Rural Loan Plan

The House Agriculture Subcommittee also held a hearing Wednesday to hear testimony on legislation that would establish a federal loan guarantee program for the delivery of local stations to rural America. Subcommittee Chairman Bob Goodlatte (R-Va.) convened the hearing to get testimony from Rep. Jo Ann Emerson (R-Mo.); Jim May, executive vice-president, National Association of Broadcasters; National Rural Telecommunications Cooperative CEO Bob Phillips; Christopher McLean, acting administrator, Rural Utilities Service, Department of Agriculture; and John Hutchinson, executive vice-president and CEO, Local TV on Satellite (LTVS). Phillips told the subcommittee that the "digital divide" between rural and urban America will worsen to a crisis - unless incentives are provided to create a not-for-profit satellite television platform to deliver digital local signals. "Rural viewers will not be able to receive weather alerts, reports on natural disasters such as hurricanes, tornadoes, fires and snowstorms, agricultural updates, political and campaign news, road closings, emergency crime alerts and other critical news available only through their local broadcasters," he said. "This is the type of information that creates thriving communities with local identities and strong local economies. Rural America needs this information and deserves to receive it," he said. "Only satellites can reach all consumers. Satellite is an ideal distribution technology for less-populated areas. Unlike other technologies, satellite is 'distance insensitive.' At a fraction of the investment, a clear, digital satellite signal can reach where cable and other broadband technologies will never go," Phillips said. Hutchinson reiterated LTVS's single "common platform" plan for delivery of local signals to rural America. The two DBS providers, Hutchinson said, "should not waste valuable spectrum and duplicate billion dollar costs by creating redundant local-into-local systems." Phillips, Hutchinson, McLean and May testified before the Senate Agriculture Committee Feb. 3.

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Space Systems/Loral Sees Busy 2000

Loral Space and Communications' satellite-building arm has a long list of deliveries to make in 2000. Space Systems/Loral, based in Palo Alto, Calif., is scheduled to deliver at least 10 geostationary satellites this year. Clients getting new birds from the No. 2 satellite manufacturer include Sirius Satellite Radio, EchoStar and DirecTV. Sirius is getting four DARS (digital audio radio service) satellites from Space Systems/Loral. The first satellite should launch aboard a Russian Proton rocket in early April. EchoStar 6, scheduled to launch in late spring or summer, follows on Loral's successful deployment of EchoStar 5 in September. EchoStar 6 will support the company's DISH Network DBS service. DirecTV will get a second Tempo satellite from Space Systems/Loral. The satellite, originally built for TCI Satellite but obtained by the DBS giant through its acquisition of PrimeStar, is set to launch in late summer. Some suggest the bird will fly in August. Other orders are for Intelsat, Chinasat, NOAA and Loral's Europe*Star endeavor. Space Systems/Loral also has a contract to design and build an advanced spot-beam satellite for iSKY. The Ka-Band bird will deliver Internet and broadband services to consumers. Other satellites may be delivered to Loral's businesses, such as Loral Cyberstar and Loral Skynet. "There is a strong increase in the number of identified opportunities for satellite orders in 2000, significantly more than in 1999," Loral said earlier this week. The opportunities are "driven by the demand globally for increased data, video and voice communications. Loral believes that Space Systems/Loral is in an excellent position to benefit from these new opportunities."

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INTL: Canadian DTH Aims For Market Share