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Technology Stocks : Primestar/TCI Satellite (TSATA)
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To: JDCFA who wrote (96)10/1/1998 7:13:00 PM
From: Noel  Read Replies (1) of 442
 
I don't think that a lack of focus on subscriber acquisition is the only reason for Primestar's slow sub growth. I think a lot of the problem is due to subscriber churn. Each time they have to pull a system, it takes away 1 new subscriber. It also adds to their costs for subscriber acquisition, since they haven't fully amortized the sub acquisition cost for a lot of their deactivations.

The real crunch will be this fall selling season. Primestar's traditional advantage in the marketplace was always that there "was nothing to buy." Carl Vogel himself noted earlier this summer that this approach was losing its luster with the falling cost of DISH and DSS hardware. With DISH instituting a "free hardware" campaign this fall (by offering a $249 rebate after the subscriber pays their 1st month of a 12 month programming commitment), Primestar will be hard pressed to justify their monthly equipment rental cost. After all, what's to stop DISH from selling an equipment protection plan for $9 per month for those customers that want peace of mind and are willing to pay for it.

I'm skeptical with the claims of a $10 per share TSATA, although I have always found this thread to be populated by informed investors who might just prove me wrong.

Good luck!

NOEL
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