Dish Eyes 5 Million-Sub Mark

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EchoStar Communications Corp. chairman Charlie Ergen last week vowed to sign up more new video subscribers for the year than any of its multichannel competitors, including direct-broadcast satellite rival DirecTV Inc.

"We expect we'll add at least 50.1 percent net subscribers for the [DBS] industry this year," Ergen said. "Figure out what our competition adds this year, and we'll add at least one more."

The company predicted in a second-quarter earnings call last Tuesday that it would reach the 5 million-subscriber milestone before the end of the year. Last month, DirecTV CEO Eddy Hartenstein projected that his company would hit 10 million by year's end.

Both DBS providers are trying to balance spending the money it takes to attract large numbers of new subscribers with keeping the cost of acquiring each new subscriber in line.

EchoStar predicted that its cost per gross new subscriber would be $450 when averaged over the course of the year. DirecTV last month estimated that its subscriber-acquisition cost would average about $525 for the year, due to increased marketing expenditures.

EchoStar said last week that it added 445,000 net new subscribers during the second quarter, ending June with more than 4.3 million Dish Network customers. The second-quarter subscriber numbers represent a 34 percent increase over 1999 figures for the same quarter.

To help subsidize that growth, EchoStar also reported that its net loss grew to $133 million for the quarter, compared with $76 million for the same period last year.

The company increased its average revenue per subscriber slightly to $45.22 last quarter, driven by higher pay-per-view movie prices, the introduction of a new programming package and the continued addition of local-to-local broadcast packages.

In 2001 and beyond, Echo-Star plans to beef up revenues with the addition of interactive services.

"We're comfortable paying $450 per subscriber knowing we'll get more than just video" revenues out of those customers, Ergen said during an analyst call last Tuesday.

EchoStar plans to download a new interactive programming guide to its OpenTV Corp.-capable set-top boxes sometime next year, Ergen acknowledged in an on-air "Charlie Chat" with subscribers last week.

In the earlier analyst call, Ergen said EchoStar has "had a lot of good conversations" with Gemstar-TV Guide International Inc. to use its guide once the DBS provider adds interactive-television services.

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