DBS Consolidation Marches On

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In the days before the SkyFORUM satellite conference in New
York tomorrow (April 6), the direct-broadcast satellite industry continued to move closer
to industry consolidation.

DirecTV Inc. announced last Thursday that its move to merge
with premium-movie supplier U.S. Satellite Broadcasting was nearly final.

The Federal Communications Commission granted approval on
the license transfer of eight key orbital slots from USSB to DirecTV. Included are five
high-power frequencies at 101 degrees west longitude, which USSB now shares with DirecTV,
and three additional high-power slots at 110 degrees west.

DirecTV's parent company, Hughes Electronics Corp.,
agreed in December to pay $1.3 billion to buy USSB. The deal is still subject to USSB
shareholder approval. A spokeswoman for USSB said the company would issue a shareholder
vote once the Securities and Exchange Commission reviews the proxy.

TCI Satellite Entertainment Inc. (TSAT), the holding
company for PrimeStar Inc., which has also agreed to sell assets to DirecTV, reported last
Thursday that its 1998 revenue decreased to $169 million from $562 million the year
before.

Although its operating loss decreased from $172 million in
1997 to $55 million in 1998, the company's net loss increased from $238 million in
1997 to $455 million in 1998.

Late last month, TSAT reported that Hughes had already paid
PrimeStar $150 million to acquire an unlaunched high-power DBS satellite. The companies
must wait for FCC approval before closing on a transaction involving an in-orbit satellite
and 11 high-power transponders at 119 degrees west.

TSAT said it expects to gain $325 million in cash and debt
assumption when the deal closes in the second quarter.

DirecTV is also expected to buy PrimeStar's
medium-power subscriber base of more than 2 million in a separate transaction valued at
more than $1 billion, pending approval of PrimeStar bondholders.

Most DBS stocks performed very well in heavy trading last
week, with pure-play stocks like EchoStar Communications Corp., USSB and Pegasus
Communications Corp. trading at or near record highs. Hughes was also up.

Only TSAT continued to disappoint -- if not surprise --
investors, trading at well below $1 per share.

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