PrimeStar Bondholders Slow DirecTV Deal

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PrimeStar Inc. announced a second extension -- until today
(March 22) -- of the deadline for its tender offer to buy back its bonds.

Observers are watching to see if PrimeStar's
bondholders will derail the company's plans to sell most of its assets to DirecTV
Inc.

PrimeStar's deal with DirecTV is tied to the
successful buyback of 90 percent of its bonds. The company had offered only 67 cents on
the dollar for the bonds, and some bondholders had threatened to force PrimeStar into
bankruptcy if its owners did not come up with a better offer.

At deadline last Friday, PrimeStar chairman and CEO Carl
Vogel declined to comment on the status of talks with the bondholders.

Some groups of investors bought PrimeStar bonds in the
secondary market at prices significantly below the 67-cent buyback offer.

Wall Street sources don't believe that PrimeStar
bondholders will see more value for their bonds if the deal with DirecTV is ultimately
called off. They said it is unlikely that another player will outbid the $1.82 billion
that DirecTV plans to pay for a combination of high-power direct-broadcast satellite
assets and PrimeStar subscribers.

Late last month, EchoStar Communications Corp. sent a
letter to PrimeStar expressing its intent to bid $600 million for the high-power DBS
assets, but not the PrimeStar subscriber base.

EchoStar chairman and CEO Charlie Ergen told analysts last
week that the offer is no longer on the table, but the company could renew it later.

In February, EchoStar signed up about 1,000 former
PrimeStar subscribers per day to its own Dish Network service, according to sources.

DirecTV plans to start converting PrimeStar customers to
its high-power DBS service once it closes its deal with PrimeStar, when it will have
access to subscribers' names and addresses.

The tender had originally been set to expire March 1, and
it was then extended until last Monday (March 15).

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