[corrected version ]Jolie Renee, WSJ article Direct TV deal : I like it:
" DirecTV, which has about 4.5 million U.S. customers (PrimeStar has about 2.3 million), would have more than nine million customers, just about all of them coming at the expense of traditional cable-TV operators."
Plenty of bandwidth all over. Bandwidth will be another nuts and bolts commodity, like fiberoptic cable, routers, ATM switches, ethernet, and all other electronic gizmos.
Thw winner will likely be the owner of the CYBERMALL: AOL.
A word about WallMart OnLine and AOL: Two totally different things: Unlike WallMArt, AOL will be able to be all things to all people. They can seel anything from Goya paintings, Mink coats to refrigerators, radios, paint, etc.Even Chuzzlewit's fancy beans and peppers !! ( I love red pepers too Chuzz ).All you'll have to do is click in the appropriate department.
You don't even have to get off your chair.
All IMHO,
TA
=============================================================
interactive.wsj.com
DirecTV-PrimeStar Accord Will Leave
Industry With Just Two Major Players
By LESLIE CAULEY
Staff Reporter of THE WALL STREET JOURNAL
Hughes Electronics Corp.'s DirecTV, the nation's biggest satellite broadcaster, will acquire the assets of its hard-pressed rival PrimeStar Inc. and a related operation for $1.8 billion, leaving the nascent but fast-growing satellite-TV industry with just two major players.
DirecTV, El Segundo, Calif., will wind up with almost seven million subscribers, a commanding lead over No. 2 EchoStar Communications Corp.'s nearly two million. Together the two will control many of the channel slots on satellites capable of reaching the entire U.S., a forbidding barrier to others that might want to muscle into that market any time soon.
The assets and customer base of PrimeStar will be bought for $1.1 billion in cash and about $200 million in stock. The suitor also will acquire the satellite assets of Tempo, a Denver-based group owned by the same big cable companies that control Primestar, for about $500 million.
A proposed PrimeStar deal with News Corp. and an affiliate of cable giant Tele-Communications Inc. was blocked by the Justice Department, which had antitrust concerns. Federal regulators long have been concerned that PrimeStar is owned by some of the nation's biggest cable-TV operators, the main rival of satellite-TV companies.
Some think the federal government's approach may have done consumers a disservice over the long haul, by reducing the number of satellite players. "I think the Justice Department blew it," says Jimmy Schaeffler, chairman and chief executive of the Carmel Group, a consulting firm that tracks the satellite-TV business. Now the industry is "basically a duopoly" with two big players "which is just one step away from being a monopoly," he said.
Michael T. Smith, chairman and CEO of Hughes, which is owned by General Motors Corp., disagreed that the satellite-TV industry would be hurt by the DirecTV deal., "This is competition for cable," Mr. Smith said in an interview, referring to the combined company. "This is seven million subscribers versus 65 million subscribers" for cable.
By 2000, Mr. Smith predicted DirecTV, which has about 4.5 million U.S. customers (PrimeStar has about 2.3 million), would have more than nine million customers, just about all of them coming at the expense of traditional cable-TV operators. DirectTV is in the process of acquiring U.S. Satellite Broadcasting Co. in a transaction valued at $1.3 billion.
If things go according to plan, he said DirecTV, currently unprofitable, would be racking up annual operating profits of $300 million to $400 million by the end of 2000 on an expected $5 billion in revenue. Mr. Smith said DirecTV remains on track to break even in the second quarter of 1999, as the company has previously predicted. "We're on the road to being profitable," he said.
Eddy Hartenstein, DirecTV's president, said the acquisition will bring more programming options to DirecTV's lineup and allow the company to offer features such as high-definition TV and interactive services. Cable-TV operators have been slow to roll out such services in many parts of the country.
DirecTV has up to two years to move PrimeStar customers over to DirecTV. The suitor operates on a different technology platform that is incompatible with PrimeStar, which has far more rural customers. It is unclear whether all those customers will switch; DirectTV is more expensive than PrimeStar and requires up-front equipment purchases. DirecTV says it plans to let PrimeStar customers lease equipment.
The deal, announced Friday, follows months of sometimes-frenetic efforts by PrimeStar's cable partners to sell the company. Under one proposed deal, News Corp. and an affiliate of Tele-Communications would have paid more than $700 million to gain control of PrimeStar, which is about 60%-owned by cable companies (Tele-Communications, Time Warner Inc., MediaOne Group Inc., Comcast Corp. and Cox Communications Inc.) and 30%-owned by TCI Satellite Entertainment Inc., a publicly traded company known by its trading symbol, TSAT. Other stakes are held by General Electric Co. and individual investors, including TCI Chairman John Malone.
--Andy Pasztor in Los Angeles contributed to this article. |
