National mass-market retailer Target Stores began selling
Philips-branded direct-broadcast satellite systems this summer for use with EchoStar
Communications Corp.'s Dish Network.
Target, a unit of Dayton Hudson Corp., had carried DirecTV
Inc. systems several years ago, but it no longer does.
With nearly 900 stores across the country, Target brings
needed market exposure for Dish. Two years ago, EchoStar signed its first national retail
account -- Sears, Roebuck & Co. -- which sells Dish equipment that carries the JVC
brand. Sears recently ended an agreement to sell DirecTV.
EchoStar has had strong relationships with independent
satellite retailers since the days when both sides promoted large-dish C-band satellite
Over the past year or so, the company has signed deals with
a number of warehouse clubs, such as Wal-Mart Stores Inc.'s Sam's Club, Costco Wholesale
Corp. and Price Club.
Market leader DirecTV, which entered the DBS category two
years ahead of Dish, has a strong grip on the national consumer-electronics channel, with
exclusive relationships at top retailers such as Best Buy, Circuit City Stores Inc., Tandy
Corp.'s RadioShack and Kmart Corp.
A spokeswoman for DirecTV said retailers that sell DirecTV
exclusively get better marketing support from the company.
Goldman, Sachs & Co. analyst Lou Kerner said the Target
news is "definitely positive" for EchoStar. "The more venues you're in, the
more product you'll sell," he added.
"I hope EchoStar really works with Target on sales
training," B.G. Marketing president Barbara Sullivan said. "DBS has such an
admirable churn rate that I'd hate to see it impacted by a less-technologically oriented
As a consumer, Sullivan said she doesn't have much
confidence in Target's consumer-electronics sales force. "My assumption is that the
sales associate is going to read that brochure along with the customer," she added.
Growing word-of-mouth about the DBS category allows
discount chains to sell the products more readily than they might have just a few years
"Five years ago [when DirecTV launched its service],
you couldn't sell a dish in Costco or Target because no one knew what it was," Tellus
Venture Associates president Steve Blum said.
Blum added that he would bet against seeing a major
consumer-electronics chain add Dish to its shelves this year because most national chains
don't want to make major changes in their product lineups this close to the holiday
"Given, too, DirecTV's position -- 'Our way or the
highway' -- taking in Dish would probably necessitate taking out DirecTV," Blum said,
"and they don't want to mess with that during the holidays."
Blum predicted that retailers would take a close look at
the DBS competitors in January, when the industry meets in Las Vegas for the annual
Consumer Electronics Show.