EchoStar Communications Corp. vowed last week to hold the
line on prices for its most popular Dish Network programming packages into the next
millenium, and the company challenged cable operators across the country to do the same.
Prices on "America's Top 40" ($19.99 per
month), "America's Top 100 CD" ($28.99) and EchoStar's
premium-multiplex-movie packages will not go up before March 2000, the company said.
"We're sick and tired of cable rates going
up," chairman and CEO Charlie Ergen told viewers of his on-air "Charlie
Chat" with subscribers last Monday. "We're tired of seeing people get
Time Warner Cable spokesman Mike Luftman called the
announcement "typical jawboning" from EchoStar, adding that it was more of a
marketing and political ploy than anything else. Last month, Time Warner chairman and CEO
Gerald Levin said rate hikes would fall one or two points below normal, but he declined to
be more specific.
Some Wall Street analysts said Ergen's move was
designed to get the attention of Washington, D.C., as it looks ahead to cable-regulation
sunsets early next year, adding that Congress may now be more sympathetic to
EchoStar's causes on the Hill, such as local-into-local legislation.
EchoStar will make sure that the rate freeze captures the
attention of current and potential customers, as well, thanks to a marketing campaign that
is set to launch this week.
The company plans a radio campaign designed around the
children's tune, "If You're Happy and You Know It, Clap Your Hands."
The ads use dead airtime in response to the challenge, "If you're happy with
your cable company, clap your hands," but a resounding roar follows the line,
"If you're happy with Dish Network holding prices, clap your hands."
For the next two weeks, EchoStar will also run print ads
devoted to the rate freeze, according to vice president of marketing Mary Peterson. After
that, the focus will return to the highly promotional "free-dish" ads through
the holidays. EchoStar will include a gold medallion created for the rate-freeze promotion
in all of its advertising.
Ergen has already appeared on-air in cross-channel spots
promoting the rate freeze to subscribers.
Peterson said EchoStar plans to continue to add programming
to its America's Top 100 CD package (which includes digital-audio services), without
increasing its price.
The company has not raised prices on its entry-level
package, America's Top 40, since EchoStar launched the Dish Network service in 1996.
Torie Clarke, spokeswoman for the National Cable Television
Association, said EchoStar's announcement "is a sign of just how fierce the
competition to cable is. There are good, reasonably priced alternatives."
When asked whether cable operators should meet
EchoStar's rate-freeze challenge, Clarke replied, "We try to stay away from
giving business advice to our members."
Steve Effros, president of CATA (the Cable
Telecommunications Association), called comparing Dish Network pricing with that of cable
"apples and oranges," because direct-broadcast satellite companies typically
don't offer exclusive local programming, local service or hardware costs as part of
their monthly fees.
"[Ergen] isn't spending the money to make his
technology two-way broadband," Effros added, "so how can you compare the
In his monthly chat to subscribers, Ergen said he was able
to hold the line on programming rates because satellite was a "very efficient form of
Ergen also told his subscribers that he would give free
satellite dishes to current subscribers who leave and take their Dish Network receivers
with them. EchoStar wants to encourage subscribers to leave their current dishes in place
so that the new residents will think of Dish Network when they move in.
EchoStar will also offer discounted installation to
subscribers who move into new homes.
In other marketing news, EchoStar confirmed last week that
it began offering a bounty on PrimeStar Inc. customers.
The promotion, which began early last week, addresses
industry speculation over whether PrimeStar competitors DirecTv Inc. and EchoStar might be
willing to buy out PrimeStar's medium-power subscriber base. Apparently, EchoStar has
chosen to see how many customers it can steal away on its own.
A spokesman for DirecTv said the company has no plans for
its own bounty program against PrimeStar.
In its "Switch to a Smaller Dish" promotion,
which runs through Jan. 9, participating EchoStar dealers will offer free Dish Network
hardware systems to new customers who turn in programming bills from PrimeStar or C-band
satellite packagers, dated July 1 or later. EchoStar will also send $50 credits toward
installation as soon as new subscribers pay their first bills.
EchoStar will not run consumer advertising to promote the
PrimeStar bounty program, leaving it to dealers to spread the word. The company will offer
additional dealer incentives for signing former PrimeStar and C-band customers.