The recent consolidation in the direct-broadcast satellite
industry hasn't put a speed bump in the way of subscriber growth.
Both EchoStar Communications Corp. and DirecTV Inc. had
their strongest first quarters to date, with EchoStar posting a 101 percent increase in
net subscriber gains over its 1998 first-quarter results. DirecTV reported a 34 percent
rise in net additions for the quarter.
EchoStar's Dish Network service posted 122,000 net new
subscribers last month, up 114 percent over March 1998, when it signed 57,000 customers.
At the end of last month, Dish had about 2.3 million subscribers.
Dish outpaced market-leader DirecTV in net -- if not gross
-- acquisitions last month. DirecTV added 120,000 net new subscribers in March, up 60
percent from the 75,000 that it signed in the same month last year. DirecTV's subscriber
base counted 4.77 million customers at month's end.
PrimeStar Inc., which has agreed to sell its medium-power
satellite customers to DirecTV, has not reported subscriber numbers in recent months. At
last count, the company had roughly 2.3 million customers.
PrimeStar has lost thousands of subscribers to rival
EchoStar in the past two months, thanks to the aggressive bounty program that EchoStar
"Two strong companies going head-to-head against each
other have proven to be good for the DBS industry," said Barbara Sullivan, president
of Denver-based B.G. Marketing Inc., countering earlier concerns that PrimeStar's exit
would cause the remaining DBS players to market less aggressively.
And there's no reason to believe that DBS' momentum will
slow down in the months ahead, according to Wall Street analysts.
"To the degree that word-of-mouth has been feeding
momentum, that will only get better with time," Goldman Sachs & Co. analyst Lou
This isn't to say that there's not enough room for both DBS
and cable to prosper, said Bob Berzins, senior vice president of high-yield research at
Lehman Bros. Inc., who believes that DBS has helped to grow the overall market for
"Cable is still growing," Berzins added,
"but DBS is growing faster."
That balance between DBS and cable growth, at least in the
video sector, could be tipped even further once Congress passes DBS-friendly
local-to-local legislation, Berzins said. He added that many DBS customers who held onto
basic-cable service might disconnect once local signals are available over satellite.
At a panel on multichannel customer-service research last
week, J.D. Power and Associates director of telecommunications-market analysis Peter
Dresch told cable executives that he saw no signs that DBS had been relying on a
"honeymoon" stage for its high customer-satisfaction ratings.
Over the past two years, all three DBS providers have
outpaced cable MSOs in customer satisfaction, although cable's ratings have steadily