New DirecTv, EchoStar Ads Target Cable

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Fresh off its best January ever, DirecTv Inc. has begun a
major campaign in 18 large cities reminding cable customers hit by rate hikes that they
have another choice, while rival direct-broadcast satellite company EchoStar
Communications Corp. will also woo cable subscribers by pitching its local-channel
service.

EchoStar's new service is now available in six
markets: Washington, D.C.; Atlanta; Boston; Dallas; Chicago; and New York. By coincidence,
those six cities are also among the 18 on DirecTv's list. Bill Casamo, executive vice
president at DirecTv, said the 18 cities were identified as markets that have taken the
hardest hits by cable-rate increases.

'We also wanted to go to the biggest markets,' he
said.

DirecTv's ads will highlight its new $99
professional-installation offer, available through participating retailers -- not to be
confused with last holiday's $100 off professional installation -- as well as its new
programming additions. DirecTv will promote its 'Select Choice' package of 40
channels for $19.99 per month.

EchoStar began running ads for its local-channel service in
Atlanta in mid-January, said Mary Peterson, its vice president of marketing. The following
week, ads started running in Washington, D.C. By last week, EchoStar was scheduled to add
New York and Boston to its local-channel-marketing campaign.

Both DirecTv and EchoStar are using print and broadcast ads
to target cable customers.

The primary message that EchoStar wants its dealers to
deliver to their customers is, 'We are the only ones to deliver local digital
channels to consumers right now,' Peterson said. 'Digital is a powerful word to
use in our advertising.'

Peterson said she had been 'pretty happy with my cable
reception' when she worked at Tele-Communications Inc. But when she went to work for
EchoStar and started watching Dish Network programming, she 'was shocked' at the
picture quality of digital.

Today, consumers in all six markets where EchoStar is
airing local channels can get information and eligibility requirements by calling the
customer-service line or checking the company's Web site.

'The Web page is a wonderful source of information for
folks,' Peterson said, 'but it's still not a widely used shopping
vehicle.'

EchoStar is fanning the flames for the new local channels
with promotions on its customer-education channel, including the monthly 'Charlie
Chat' that chairman and CEO Charlie Ergen hosts each month. The company will also use
its new monthly subscriber newsletter, which will be sent for the first time with its
February billing statements, to promote the new service.

Those promos could be aimed at cable customers who retained
their basic service in order to watch their local broadcast stations.

In addition to local newspaper ads, EchoStar is attempting
to buy spots on local broadcast stations. Peterson said the CBS affiliate in Atlanta has
run EchoStar's new ad 'since day one,' as has the ABC station in
Washington, D.C. The Fox Broadcasting Co. affiliates in both markets, however, have
declined to run the ads.

Fox is owned by News Corp., which backed out of a deal with
EchoStar last year to run a joint DBS venture. The two companies are going to court later
this year over the failed deal.

According to Peterson, the other local television stations
in Atlanta and Washington, D.C., have been receptive, but some have neither accepted nor
rejected the ads.

'In a lot of cases, they're really on the
fence,' Peterson said. 'They need a little reason to be pushed over to the other
side.'

Some industry observers have said that local broadcasters
may shy away from the ads because the broadcast industry has not yet chosen to support
EchoStar's local-channel service in its current form. Broadcasters are seeking
must-carry and retransmission-consent requirements from DBS companies similar to the rules
that cable follows now.

Today, EchoStar is being careful not to deliver
local-channel signals to anyone outside of a given DMA, nor to anyone who can get a clear,
off-air signal. The company publishes a list of eligible ZIP codes on its Web site.

When asked if she was afraid that EchoStar was in danger of
disenfranchising consumers who were not eligible for the service, Peterson replied,
'We're doing the best that we can. We're the only DBS company today to
offer local. We're putting our money where our mouth is, but we can't offer it
everywhere.'

As part of its new $99 professional-installation promotion,
DirecTv is asking its retailers to educate consumers on the benefits of having an off-air
antenna installed when the satellite dish is installed.

Dealers in the Washington, D.C., and Atlanta areas said
consumers have been asking for the local-channel service. Chris Fox, service and
installation manger for Home Theater Systems in Warrentown, Va., said the dealer would
sell more second-dish systems if it could get more hardware from EchoStar.

Tommy Hairston, CEO of Georgia-based Earth Satellite
Electronics, said that when customers ask about the local-channel service, 'we
explain that they need a second dish.' He added that they also tell customers that
they can get other programming from that second dish.

Meanwhile, last week, Satellite Broadcasting and
Communications Association president Chuck Hewitt told reporters at a briefing in New York
that he thinks that 1998 will be a banner year for DBS. Cable's digital offerings are
still a couple of years away from widespread deployment, he said.

'Our position is excellent to go forward and
compete,' Hewitt said.

Direct-to-home subscriber rolls swelled by 118,572 in
January, even with the net loss of more than 29,000 C-band customers, according to
SkyTrends, the service co-operated by the SBCA. DirecTv gained 82,000 subscribers,
followed by Dish Network with 50,000, despite equipment shortages, and PrimeStar Partners
L.P. with about 15,000.

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