DBS -- Except PrimeStar -- Catches Fire


The direct-broadcast satellite industry, which historically
sees a dip in system sales in early spring, seems to be catching spring fever this year

According to figures posted by the Satellite Broadcasting
and Communications Association last week, the small-dish industry is closing in on the 7
million-subscriber mark. And when larger C-band-dish customers are factored in, the tally
surpasses 9 million.

The only sour note came from cable-controlled PrimeStar
Inc., which posted limited gains.

Market-leader DirecTv Inc. acquired 77,000 new subscribers
last month, up from 75,000 in March. Its total on April 31 was 3.605 million homes.

EchoStar Communications Corp.'s Dish Network signed
53,000 new customers in April. That's just short of its 55,000-subscriber sign-up in
March, and it put the company's subscriber count at 1.255 million.

"These are very strong numbers for both EchoStar and
DirecTv," said Vijay Jayant, associate director and satellite analyst at Bear Stearns
& Co. Inc. in New York. Jayant added that DirecTv's April numbers were up 54
percent over April 1997 figures, and EchoStar's were up 60 percent. Last April's
subscriber-acquisition numbers were 50,000 for DirecTv, 46,000 for PrimeStar and 33,000
for EchoStar, according to figures from Golden, Colo.-based SkyTrends.

"They're doing something right," Jayant

DirecTv spokesman Jeff Torkelson said that for the past
seven months, DirecTv's monthly numbers have been better than those from the previous

"We're on a roll," said Stanley E. Hubbard,
president and CEO of U.S. Satellite Broadcasting, which shares the Digital Satellite
System platform with DirecTv.

Hubbard added that DSS manufacturers were just starting to
catch up on product availability, which had been short due to unexpectedly high demand
earlier in the year.

"If you have to have a problem, that's the one to
have," Hubbard quipped.

Bruce Leichtman, director of media and entertainment
strategies for The Yankee Group, credited aggressive marketing strategies, higher cable
rates and positive word-of-mouth for the DBS growth.

EchoStar plans to encourage word-of-mouth about its service
with its "Tell-a-Friend" customer-referral program, which runs through June.

PrimeStar said its total subscriber count on April 22 was
just under 2.1 million. Following its roll-up from a partnership on April 1, the company
determined that it had underreported its total subscriber base through March. Going
forward, PrimeStar will report subscriber numbers on a fiscal-month basis, ending on the
22nd of each month.

PrimeStar's subscriber-acquisition total was 19,647
for the first three weeks in April, according to the company. In recent months, PrimeStar
executives had attributed its sales slump to distractions associated with the pending

Jayant said PrimeStar's April numbers were not good.
He added that the DBS industry has a limited window of opportunity to grow its subscriber
base before cable rolls out digital more aggressively.

Earlier this month, the U.S. Department of Justice shot
down PrimeStar's plans to move its business to a high-power DBS service when it filed
an antitrust suit against PrimeStar. The suit would enjoin PrimeStar from merging with
American Sky Broadcasting Inc., the joint DBS business of News Corp. and MCI
Communications Corp.

A May 1998 Bear Stearns report on DBS, released just prior
to the DOJ decision, estimated that the industry would add 2.4 million subscribers this
year, and it further predicted that 1998 would be the peak year for DBS-subscriber

Jayant said last week that with PrimeStar unlikely to move
to high power this year, DirecTv and EchoStar may benefit from higher sales. But
there's also the chance that "you might miss somebody completely" if
certain customers were most likely to buy from a DBS dealer that only carried PrimeStar.

Jimmy Schaeffler, president of The Carmel Group, which is
based in California, said PrimeStar's rental option offers consumers another choice.
He added that because PrimeStar can't offer that option for an 18-inch-dish system
today, that leaves room for DirecTv or EchoStar to step in instead.

"The market is huge," he said.

Schaeffler believes that the industry is poised to see a
ripple effect in sales as DBS acceptance reaches critical mass.

Mickey Alpert, president of Washington, D.C.-based Alpert
and Associates, said that once DBS dishes reach that point, consumers won't need to
take three months or more to buy a system, as they do today.

Next year could be even better, Alpert added, if Congress
passes legislation favoring local-to-local broadcast-station delivery via satellite.

Jayant said 1999 could be another banner year if a third
high-power DBS company buys the ASkyB assets and enters the business, backed by a huge
marketing campaign.