DirecTv Commits to HDTV; Thomson Tapped


Las Vegas -- Thomson Consumer Electronics Inc. and DirecTv
Inc. last week announced high-definition television plans that could make HDTV programming
available virtually nationwide by the end of the year.

At a press conference on the eve of the annual Consumer
Electronics Show here, DirecTv president Eddy Hartenstein said the direct-broadcast
satellite company would commit to broadcasting two pay-per-view movie channels in HDTV as
soon as consumers have HDTV sets in their homes.

For its part, Thomson said it will build the Digital
Satellite System technology into all of its first-generation HDTV models. This circumvents
the need to find a way to make DSS set-top boxes and HDTV sets interoperable. The cable
industry is still working to create standards that will allow interoperability between
HDTV sets and digital cable boxes.

Hartenstein said he expects other television manufacturers
-- especially those that are already DSS licensees -- to build the DSS-receiving
technology directly into their HDTV models.

Thomson's first HDTV model -- a joint venture with
Hitachi Home Electronics -- is scheduled to hit retail shelves this fall. The 61-inch,
wide-screen, rear-projection unit is projected to cost consumers about $7,000, according
to Thomson executive vice president and chief operating officer James E. Meyer, although
suggested retail pricing will not be set until the product launch later this year.

DirecTv sent two DSS channels of HDTV programming -- a
glitzy movie promotion from Columbia Pictures and a professional football game -- live
from its Castle Rock, Colo., broadcast center to the Thomson press conference via an
18-inch satellite dish atop the Riviera Hotel.

The signal was interrupted -- briefly -- more than once.
Hartenstein said the HDTV uplink had been in operation 'for all of 48 hours'
prior to the press conference. He added that DirecTv was not afraid to demo the live feed
to reporters even while the company is still working out all of the technical details of
providing an HDTV signal.

'With the team from Thomson and DirecTv, we're
going to get there by this fall,' he said.

'This fall, HDTV will be only one channel switch
away,' Meyer said, 'and other programming providers will have to be prepared to
deal with it.'

'Ever since its inception, the Digital Satellite
System has been at the forefront of technology,' Hartenstein said, 'and
we're going to stay there.'

DirecTv will not have to give up any of its current PPV
channels to make room for the new HDTV programming, Hartenstein said. The company has
already set aside bandwidth for the two new HDTV feeds, each of which will require four to
five times the bandwidth of a standard-definition channel.

Although DirecTv has not yet signed any deals with
Hollywood studios specifically for HDTV, it has long-standing relationships with most of
the studios for its PPV movies, which generally earn triple-digit buy-rates. Hartenstein
said pricing on the HDTV PPV movies may depend on licensing agreements with the studios.
DirecTv now charges $2.99 for PPV films.

In the short run, DirecTv is not likely to make much money
on the HDTV channels themselves, because market penetration of HDTV households will be so
low initially.

Even industry champions are not predicting first-year sales
of digital and HDTV sets to reach mass-market levels. Meyer estimated that the industry
would sell 'more than 20,000 but less than 100,000' units in the first full year
of HDTV sales.

To put it in perspective, Meyer said, color TV began with
5,000 unit sales in its first year.

When compared to the total television-household universe,
100,000 units seems small. But if a good portion of early HDTV consumers also choose to
activate their built-in DSS receivers, that could add significantly to DirecTv's
subscriber base, which numbered just over 3.3 million at the end of 1997.

U.S. Satellite Broadcasting, which shares the DSS platform
with DirecTv, has not yet committed to HDTV programming. The company has been in talks
with Home Box Office regarding the premium movie service's plans to deliver HDTV
content, but USSB president and CEO Stanley E. Hubbard said the company is not close to
making a decision on the matter.

'Once you commit the bandwidth, it's
committed,' he said.

Hubbard said he wants to see how retailers and consumers
react to digital television.

'It would be silly to commit bandwidth to something
that consumers aren't going to embrace in a big way,' he said.

Hartenstein said it is unlikely that certain channels will
transition to HDTV anytime soon. For example, he added, it would not make much sense for
networks that rerun old TV shows to broadcast in HDTV.

But DirecTv does not have the same bandwidth constraints
that USSB has. To make room for more HDTV channels, Hartenstein said, 'we could
easily double our bandwidth.'