Nashville, Tenn. -- Executives from PrimeStar Inc. told
reporters during the recent satellite show how they will battle churn and get the
struggling company back on track.
"Churn is one of the biggest issues that people think
about when they hear 'PrimeStar,'" said president Dan O'Brien, who outlined how
the direct-broadcast satellite service will solve that problem at the annual Satellite
Broadcasting & Communications Association show here late last month.
Newly named chairman and CEO Carl Vogel has been
preoccupied with shopping PrimeStar to investment bankers and potential equity partners
since he started with the company about two months ago. Not long before Vogel came on
board, the U.S. Department of Justice filed a lawsuit to block PrimeStar's planned merger
with News Corp.'s American Sky Broadcasting Inc., which would have given PrimeStar an
entry into high-power DBS.
"I've spent 100 percent of my time trying to fight the
Department of Justice issue and trying to get PrimeStar involved in high power,"
He joked that he had been "hoping to make a big
announcement today, but Charlie [Ergen, EchoStar Communications Corp.'s chairman and CEO]
wouldn't agree to sell me his company, and I wouldn't sell him PrimeStar."
Industry observers expect Vogel to sell down PrimeStar's
cable ownership long before the February court date for the DOJ trial. But Vogel said he
is more interested in bringing a sense of closure to his staff than in beating the court
Vogel also told reporters that any corporate cutbacks are
likely to happen sooner, rather than later. "We need some certainty," he said.
To battle churn, PrimeStar will take three major steps:
First, it will lower the cost of re-entry for
subscribers who move. Under the "Priority Move" plan, PrimeStar will charge
current subscribers only a $19 reconnect fee, rather than a new installation fee, which
could otherwise run $150 to $199, or more. PrimeStar's medium-power customers do not have
the option of self-installing their dishes.
O'Brien said about 20 percent of PrimeStar's disconnects
are attributed to relocation.
Second, PrimeStar has introduced a "Specialized
Payment" program for delinquent accounts. O'Brien said the program pays attention to
when customers pay their bills, and the company will work with those who have fallen
behind on their payments to make sure that they stay on by offering delayed-payment
And third, through the company's new "Win
Back" program, PrimeStar customer-service representatives call any subscriber who
asks to be disconnected within 24 hours.
PrimeStar also said it will market its service to nearly 5
million American Farm Bureau Inc. members through an exclusive agreement with the AFB. As
part of the deal, PrimeStar will carry the AFB's Acres rural-information service.
The Nashville show marked a departure for the SBCA in that
the group will now hold one show per year, instead of two. Attendance was 5,222 -- up from
3,962 at last July's show in Nashville and 5,147 at the show in Las Vegas this past
spring, but down compared with the summer 1996 show in Nashville (6,009).
Next summer's annual show will move to Las Vegas.
In the past few years, the satellite-television industry
has experienced significant changes in its dealer base, as its focus has moved from
selling larger C-band dishes to DBS systems. Heavy competition from consumer-electronics
retailers has weeded out many smaller satellite dealers and heightened the need for
remaining dealers to increase their skills and embrace new technologies.
"Five years from now, we don't want some Hollywood
studio to come out with a new movie called 'The Satellite Guy,'" joked SBCA
president Chuck Hewitt, as he introduced the industry's new dealer-certification program.
To help dealers keep up with DBS-market data and sales
tips, the SBCA will publish a new dealer newsletter, available free-of-charge over the
Also at the show, EchoStar introduced its next-generation
Dish Network set-top boxes. The three systems range in suggested retail price from $179 to
$319, and they will be available this fall.
Each new model offers translucent program information so
that a viewer can watch and listen to a show while scrolling through the on-screen guide
for other options at the same time.
Top-of-the-line model 4720 is the first stand-alone Dish
Network system to offer Dolby Digital surround-sound capability. The feature is already
available on a combination Dish Network receiver/digital VCR from JVC.
Mark Jackson, senior vice president of satellite services
for EchoStar, said the company is negotiating with Hollywood studios to bring Dolby
Digital-encoded movies to Dish Network. The first such programming is likely to be
pay-per-view, Jackson added.
Dish Network is not planning to offer those movies in a
wide-screen format, as DirecTv Inc. does with its Dolby Digital PPV offerings.
Jackson also said EchoStar may build an adapter for current
Dish Network boxes that would allow them to receive Dolby Digital signals.