April 11, 1995 in Features

Directv Serves Large Programming Menu On Small Dish Company Expects 500,000 Subscribers To Be Signed Up Soon

Lynn Elber Associated Press
 

DirecTV had such heavenly visions when it launched its first satellite a little more than a year ago.

Thousands of petite dish receivers would quickly sprout on rooftops across America and capture 150 television channels for subscribers paying a fair-sized monthly fee.

Pay heed, children: Corporate dreams do come true. DirecTV, which went into nationwide distribution at the tail end of 1994, is closing in this month on a half-million customers.

Compare that to the introduction of other new consumer electronics, and it’s easy to see why DirecTV executives are in orbit. Compact disc players racked up first-year sales of 35,000; VCRs debuted with the sale of 30,000 Sony Betamax units.

For now, RCA is the sole authorized manufacturer of the dish system. In less than two months, Sony will be selling its version.

A total of five manufacturers will be marketing the receivers within 15 months and boost their availability.

DirecTV’s appeal includes a dish that at 18 inches and currently about $700 is smaller and cheaper than the traditional models; sound and picture approaching laser disc and CD quality; and, in the bountiful American tradition, a menu of program choices bigger than most viewers’ TV tummies.

Eddy Hartenstein, president of El Segundo-based DirecTV, calls its initial success “magic.” Competitors, including the cable industry, have their own pet name for the system: Deathstar.

Hartenstein credits Canada with originating the colorful moniker. Although DirecTV’s two satellites with a third to be launched this summer - could reach many Canadian homes, the TV industry there is fighting to bar the service.

A look at the impact on U.S. cable systems explains why, at least in part. Fear of crossborder cultural trespass is another reason.

According to a DirecTV survey of its customers, half live in cable-available areas. Of those, two-thirds were cable subscribers when they purchased satellite service through DirecTV or programming partner United States Satellite Broadcasting.

Among the cable customers, 60 percent immediately canceled their cable service, the survey found. Of the remainder, 40 percent downgraded to a minimum cable package.

“They’re buying the dish and, frankly, loving it,” says Hartenstein.

Mark Terrill, who became a DirecTV customer last December, is at least very fond of his. He installed it himself, knocking about $200 off the start-up costs.

“We weren’t happy at all with our cable quality. It was typically snowy. DirecTV is practically laser-disc quality, just as they advertise,” said Terrill, a suburban Los Angeles resident.

He chooses among program packages such as “Total Choice,” which for $29.95 a month provides more than 30 cable networks, including CNN, ESPN and Disney, and movie channels. There also are 28 digital radio channels ranging from reggae to classical.

But the tab can swell.

Additional sports options include the “NBA League Pass,” with more than 400 basketball games for $149, and “NHL Center Ice,” with more than 200 hockey matches for $69.

Pay-per-view movies on 55 channels, from every major Hollywood studio and playing as often as half-hourly, are $2.99 each. An on-screen program guide helps viewers through the program maze and can summon up a show.

Terrill also kept his minimum cable service for $25 monthly, which provides the broadcast networks mostly unavailable via DirecTV. An old-fashioned antenna also is used by many subscribers to capture the local ABC, CBS, NBC, Fox and PBS affiliates, DirecTV said.

There are minor technical drawbacks, Terrill notes: sporadic noise on the cable movie channels and a tendency on live sports broadcasts for players or balls in motion to appear “digitized” - a technical glitch that will be banished soon, DirecTV says.

Consumer acceptance of DirecTV - and the chance to impress Congress with more reasons to ease cable industry regulations - led the National Cable Television Association to issue a paper noting the strengths of direct broadcast satellite companies like USSB and DirecTV.

DirecTV is a unit of giant GM Hughes Electronics; $750 million has been invested in its development.

“We regard it as … significant, long-term and well-financed competition,” said NCTA spokesman Rich D’Amato in Washington.

In response to both satellite services and looming competition from program sources that deliver over phone lines, cable operators launched a national on-time service guarantee program last month, he noted.

Hartenstein suggests modestly that DirecTV is a relatively small threat, even if it reaches its financial profit point of 3 million subscribers in late 1996 or its goal of 10 million DirecTV’ers by the year 2000.

Ten million subscribers won’t equal one-fifth of the cable TV customer base of 60 million, he said.

But what about the goal for, say 2010, and beyond?

DirecTV, after all, clearly is aiming for the outer limits.


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