Cable operators, beware: Direct-broadcast satellite
providers and their retailers added more than 200,000 new subscribers last month, and they
are riding yearlong sales momentum that they predicted will grow stronger during the
holiday selling season.
DirecTv Inc. signed up 121,000 net new subscribers in
September, up from 96,000 last September. The El Segundo, Calif.-based company has posted
stronger sales each month this year versus similar periods in 1997. And last December
alone, DirecTv added more than 180,000 new customers.
At the end of last month, DirecTv's subscriber count
totaled 4.058 million.
EchoStar Communications Corp. ended September with just
over 1.6 million subscribers, after adding 81,000 new customers to its Dish Network for
the month. In September 1997, EchoStar actually topped DirecTv's per-month acquisitions,
when it signed 105,000 new customers during an installation-discount promotion.
At 2.166 million customers, PrimeStar Inc. has maintained
its No. 2 position in the DBS market, but that may change next year if the company's
growth remains flat.
PrimeStar reported a net subscriber acquisition of just
10,002 for the fiscal month of September. But the numbers can be deceiving: PrimeStar's
aggressive promotional efforts drew heavy calls to its toll-free number, according to
Chris Sophinos, senior vice president of sales and marketing.
When reached in late September, Sophinos said he expected
the company to end the month with 100,000 gross additions, before churn.
In August, PrimeStar reported 28,000 net new customers, and
its gross connect rate was 78,000, Sophinos said.
PrimeStar continues to have a higher monthly churn rate
than the rest of the DBS industry. A spokesman for PrimeStar said the company also
deliberately disconnected about 30,000 customers in September in an ongoing effort to
consolidate and clean up the databases that the different PrimeStar partners brought to
the company's roll-up earlier this year.
Goldman Sachs & Co. vice president Lou Kerner said
EchoStar's subscriber numbers were good, especially because early fall is when it is most
vulnerable to DirecTv's National Football League promotions.
DirecTv owed much of its September subscriber growth to an
aggressive promotional campaign tied to its "NFL Sunday Ticket," which was
scheduled to end this past Sunday (Oct. 11). High-profile print and television ads offered
$200 in programming discounts to attract new subscribers.
Although DirecTv has not yet released plans for its next
promotional campaign, in recent years, the company has offered the last few weeks of NFL
Sunday Ticket free-of-charge to certain new subscribers.
DirecTv president Eddy Hartenstein said it's not just
advertising that's driving subscriber acquisitions: It's a change in the television
"More and more consumers are cutting their cable
wire," Hartenstein said, "and once they do that, it's a pretty permanent
As one indication of the growth that the DBS industry has
seen in the past four years, Thomson Consumer Electronics said last week that it had
shipped its 5 millionth Digital Satellite System receiver in the United States. Thomson is
the largest of a number of suppliers of DSS hardware, which is compatible with DirecTv and
U.S. Satellite Broadcasting services.
Hartenstein said more than 20 percent of DirecTv's
subscribers have more than one DSS set-top box in their homes.
An EchoStar spokesman said the company is excited about its
momentum going into the fall selling season, especially with its new "It's Free"
Steve Blum, president of California-based Tellus Venture
Associates and a former USSB executive, said it will be interesting to see how EchoStar
fares with its "free" offer.
"We always used to say that 'free' is a very good
price," Blum said, adding that the promotion may help to differentiate EchoStar from
DirecTv in the marketplace. "The problem is that it's a slippery slope. Once you
introduce the word 'free,' you may not be able to sell the hardware again."
Hartenstein said DirecTv had no intention of following
EchoStar with a free-hardware promotion of its own.