Nascent cable networks should find more room for carriage on direct-broadcast satellite platforms now that the two leading operators plan to introduce new programming packages.
Signing a DBS-carriage deal today brings nationwide distribution, but not necessarily a large number of eyeballs. Just as new networks find it easier to obtain digital carriage on cable, rather than analog carriage, DBS companies are putting much of their newest fare outside of their most populated programming packages.
This past Saturday (April 1), EchoStar Communications Corp. launched its Dish Network "America' s Top 150" package, which sells for $39.99 per month. Last Monday, the company announced the package' s 23 new video and 20 new audio channels.
Included in AT150 are seven of Starz Encore Media Group LLC' s thematic movie channels, two feeds of The Movie Channel, The Biography Channel, Bloomberg
Television, Boomerang, CNN/SI, Discovery Civilization, Discovery Home & Leisure, Discovery Kids, Discovery Science, Discovery Wings, Do It Yourself Network, History Channel International, Outdoor Channel, Outdoor Life Network and Speedvision.
AT150 also includes more than 100 channels found in the company' s "AT100" package.
EchoStar vice president of marketing Mary Peterson confirmed that the company planned to raise the price of AT100, Dish' s most popular package, to $29.99 per month, an increase of $1, effective May 1.
The "AT40" entry-level package will remain priced at $19.99 per month-the same price as when it launched in 1996.
In November 1998, EchoStar chairman Charlie Ergen promised to freeze rates at least until March 2000.
Keeping a $19.99 price point is important, Peterson said, "because it just beats the pants off of cable."
An EchoStar spokesman also said the Home Box Office multiplex service would rise to $11.99 per month due to increases in programming costs. Other premium services will continue to cost $10.99.
DirecTV Inc. has said that it will raise the monthly prices of its programming packages by $2 each May 25, but only for new subscribers.
"A lot of our customers came to us after they grew tired of constant rate increases from cable, and that' s something we' re cognizant of," DirecTV spokesman Bob Marsocci said. "Customer retention is our highest priority."
Grandfathering the price for existing subscribers "just gets too complicated," Peterson said. "We' ve got a new price. It' s just $1 more, and we' ll do it across the board."
When DirecTV launched in 1994, prices for its "Total Choice" package were a few dollars more than what cable charged for a relatively similar number of channels, but without a digital picture or interactive guide, DirecTV reseller Pegasus Communications Corp. chairman Mark Pagon said.
Over the years, prices rose for the cable packages so that in many markets, cable now costs about $5 per month more than what Pegasus charges.
"When you have a premium service [like DirecTV], you don' t want to create the
perception that you' re offering something other than a premium service," Pagon said. "There clearly was room to take a rate increase."
DirecTV president Eddy Hartenstein told analysts earlier this year that the company plans to introduce a new family-oriented programming tier this spring. Although DirecTV would not discuss which channels the new package would include, an industry source said the tier was expected to offer nine channels for $5 per month.
The new tier is expected to launch in late May, about the same time the company plans to roll out its price increase.
Dish Network dealers seemed most excited about adding Speedvision and the commercial-free movie services from Starz Encore, Peterson said, as well as the new services from Discovery Networks U.S.
Conspicuously absent from EchoStar' s recent programming additions were networks tailored to women, such as Oxygen, SoapNet and Lifetime Movie Network. Peterson would not comment on the status of discussions with any particular network, but she said EchoStar is in active negotiations for several new services.
"Over time, we'll continue to build this package," she said. "I' m quite sure we' ll add more channels and maintain the $39.99 price point."
EchoStar plans to announce the new programming lineup to its customers tonight on an on-air "Charlie Chat" hosted by Ergen. Most customers need upgraded dishes to receive the package, which includes programming delivered from two orbital locations-the core 119 degrees west longitude and the newer 110 degrees.
EchoStar plans an aggressive subscriber-acquisition campaign surrounding the new package in May, but Peterson declined to give details. Current retail promotions are set to end April 31.
To help manage demand, EchoStar announced last week it will build a new customer-service center in Montgomery County, Va., set to open this fall.
Separately, EchoStar said it would market a new "America' s Top 70" package in Alaska and Hawaii for $29.99 per month.
The service will use spot-beam technology to deliver 40 favorite cable networks-including Disney Channel, ESPN, ESPN2, Food Network, FX, Lifetime Television, MSNBC, Nickelodeon, Turner Classic Movies, TV Land, VH1 and WGN-to customers with satellite dishes ranging in size from 24 to 48 inches, the company said.
The service also includes 30 commercial-free audio channels.