DirecTV responded to the lawsuit Sears filed against the DBS provider, saying that the retail giant failed to properly promote and aggressively sell the small dish service in its stores. "We terminated our agreement with Sears because we were disappointed with the way Sears merchandised, marketed and sold DirecTV," spokesman Bob Marsocci said. "Specifically, Sears failed to display DirecTV in its stores in a way that attracted customers," he said. Marsocci added that the company found DirecTV receivers in Sears stores that were inoperative or vandalized. In addition, "Sears failed to properly train its sales force," Marsocci said. "And the net effect of Sears' failure - after six months of carrying both DirecTV and DISH Network - its share of all sales of all satellite products to new subscribers fell from 8.6% to 4.2%." Sears is seeking $23.2 million in damages in a claim filed in superior court of California. In the suit, Sears alleged that DirecTV agreed in 1998 to pay past-due commissions and settled on a formula for Sears' ongoing commissions. DirecTV then allegedly ended the agreement that allowed Sears to sell the service in August 1999 and told the company in October 1999 that it would not pay any further commissions. Marsocci said that DirecTV believes it has paid everything to Sears it has been entitled to. "We also believe the lawsuit is fundamentally without merit," he said. The Sears filing is the latest of several lawsuits brought against the DBS provider. Last month, competitor EchoStar filed a suit against DirecTV over alleged monopolistic practices. The suit was followed by a counter-claim filed by DirecTV. The National Rural Telecommunications Cooperative, Pegasus and Golden Sky also are in litigation with DirecTV over access to premium channels.

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EchoStar-DirecTV Ready Program News

EchoStar's DISH Network and DirecTV are expected to announce channel additions for their respective packages this week, some of which have been announced and others that are under wraps. EchoStar's new channels include DIY (Do-It-Yourself) from Scripps, Outdoor Life and Speedvision, and Starz!/Encore selections previously announced by the company. Networks that haven't been previously announced also could be unveiled by the company today. "With the new choices, DISH Network will have more movies, more family entertainment and more action-oriented sports offerings available in the United States," said EchoStar's Marc Lumpkin. DirecTV also is preparing program news of its own, but the company wouldn't disclose the nature of the announcements on Friday.

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Analysts Tackle XM-Sirius

Shares for the two DARS players, Sirius Satellite Radio and XM Satellite Radio, have tumbled from their recent highs, which according to one analyst creates an ideal time to buy their stock. "We believe that this drop presents a buying opportunity for DARS companies," Banc of Securities' Armand Musey said. He added that both companies are trading below their price targets, which are $68 for Sirius and $62 for XM. William Kidd, an analyst at C.E. Unterberg Towbin, said Sirius remains his top satellite pick. He rates the stock a Strong Buy with a $100 year-end price target. "Our confidence in Sirius shares is founded on our unwavering belief in the satellite-radio opportunity and business model," he said. "Simply, in a broadcast capacity, satellites have no terrestrial equal, making them the most inexpensive means of reaching a nationwide customer base the size of the U.S, as DBS companies have well proven." Kidd cautioned that Sirius' share performance is contingent upon successfully launching satellites this year. "Therefore, we consider Sirius shares best suited for risk-tolerant investors," he said. Meanwhile, Hughes Network Systems signed an equipment supply contract with XM Satellite. The deal, valued at $115 million, calls for HNS to provide system development and manufacturing of XM's terrestrial repeater equipment. HNS' parent, Hughes Electronics, has a stake in XM Satellite.

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SkyBOX: Cracking the Duopoly

A little over one year ago, good fortune smiled upon U.S. DBS companies. Thanks to the bumbling of competitors and the inertia of bureaucracies, DirecTV and DISH found themselves the chosen pair in a government-mandated duopoly. It was - and, to a large extent, still is - a golden business opportunity. But already the first cracks have begun to appear. At the start of last week, Business Week issued a report that Bell South would launch a satellite video service for its subscribers. Although Bell South officials steadfastly stonewalled on the question, many Wall Street analysts agreed that such a service is on the planning boards. Not with DIRECTV. Not with DISH. But (presumably) with Loral. By the end of the week, a second - and this time confirmed - report surfaced that major MDU player, WSNet, would begin to offer alternative satellite programming to multiple dwelling unit residents not via DISH or DirecTV but through HITS and Loral. Now HITS is the old PrimeStar-derived headend-in-the-sky service, now owned by AT&T. And AT&T owns Liberty Media which in turns owns TCI Satellite, which scored a strong uptick on the WSNet news. Liberty, of course, is run by none other than favorite multichannel Svengali Dr. John Malone who also backs Internet-in-the-sky play iSky and ... Are we starting to see a pattern yet? or the next shoe, we suggest all eyes turn to Pegasus Communications. While we have yet to hear a confirmed report, the buzz could put a beehive to shame. After all, as the leading NRTC distributor, Pegasus now has well over 1.1 million DirecTV subscribers on its rolls. And CEO Mark Pagon is not a guy known for standing still. So where does all this leave the aforementioned duopoly? Cracked, but certainly not broken. The next year, however, should be very interesting to watch. EH Do you have a comment or letter for SkyBOX? Write the editors at: editor@skyreport.com

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PEOPLE: SES Appoints Americas Director