DiviCom in the running to do PrimeStar head ends..............
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Primestar Plans Small Dish DBS
- -August 4, 1997
By Greg Tarr
Confident that its roll-up into a freestanding direct-broadcast satellite (DBS) company will be completed soon, Primestar announced at the Satellite Broadcasting & Communications Association Show in Nashville, Tenn., aggressive plans to launch this year a high-power small dish DBS system to rival DSS and DiSH Network.
"Our goal is to have a full-fledged high-power DBS service available late this year," stated Jim Gray, Primestar Partners CEO. "Our initial product will be available at retail and will feature a 120-channel service using an 18" dish. Customers who sign up for the new product will then be transitioned to an expanded high-power service when it becomes available in 1998."
The initial offering will be delivered by a satellite in the 119-degree orbital slot, eventually expanding and moving to Primestar satellites at 110 degrees.
New company president Dan O'Brien told reporters Primestar is currently looking for two "name brand" CE manufacturers to develop receivers for the new DBS system. He added that the system may use the DVB MPEG-2 digital compression platform, now used by EchoStar and AlphaStar.
Primestar will more heavily focus on selling equipment for the new high-power service, although the lease provision that currently makes up most of Primestar's medium-power business will also be available, he said.
"We absolutely intend to sell equipment if people want to buy, which is not a big part of our model now, but we will not abandon our nothing-to-buy lease model," O'Brien said. "This may be how we differentiate marketing between medium power and high power for a while to offset a tremendous influx as we try to move people over [from medium to high power]."
In tandem with the DBS system launch, Gray said the company's current "top priority" is to complete the roll-up of Primestar Partners into the freestanding Primestar Inc. He added that the roll-up is expected to be completed "in the fourth quarter of this year."
O'Brien told reporters "the roll-up of Primestar into a national company means there will be unification across all areas of our company, including distribution, operations and marketing."
Despite Primestar's current 1.8 million subscriber count, O'Brien said its marketing structure "has hindered the dealers' ability to optimize their success."
The current structure, which allows the different cable partners to administer their own marketing plans within their respective cable TV territories, resulted in cumbersome ZIP code restrictions, disparate market strategies, and multiple points of contact for dealers, he said.
Through the roll-up, Primestar's new marketing strategy will become "a best of breed," saving the most successful practices of the different partners while discarding less successful systems.
The first step, said O'Brien, will be to lift the ZIP code-determined restrictions beginning August 28 and move to a more conventional distribution structure.
Expanding its retail distribution, Primestar reported two days before the SBCA show that it struck deals with two major buying groups: Key America and Associated Volume Buyers. Both organizations currently carry equipment for the Digital Satellite System and EchoStar.
The agreements give Primestar up to 5,000 more CE storefronts, most of which are small independent chains or single-store concerns.
Meanwhile, Primestar continues with its current medium-power satellite system, which will have its lineup expanded by nine channels in August and September for a selection of over 160 channels.
In August, Primestar will add five more pay-per-view channels, bumping up the PrimeCinema selection by 50%. In September, the Primestar Hollywood Hits premium package will add HBO Family West, Showtime 3 East and Starz! 2 West. At the same time, the company will add the Animal Planet channel to its PrimeValue package at no additional charge.
August 28 through October 31, Primestar will run its first national promotion, called The Big Deal. The $20 million effort offers consumers "a $130 value of installation, programming, and the new PrimeFinder remote."
The Big Deal includes a $50 rebate on system installation, the first month of Showtime for free, and Prime Entertainment, which includes Starz! and the Encore multiplex channels.
"This promotion will send dealers a very strong message of what they can expect from a rolled-up Primestar," said marketing senior VP Dennis Wilkinson. The promo will be supported with national TV, print and radio advertising, local marketing materials, and co-op advertising in 35 markets. |
