EchoStar Communications Corp. last week won a long-sought distribution victory when it signed its first national consumer-electronics retailer: RadioShack Corp.
RadioShack plans to offer EchoStar's Dish Network hardware as a lease option in its 7,200 stores starting April 1, said retail chain president Dave Edmondson. RadioShack sells DirecTV Inc.'s direct-broadcast satellite systems.
"The demand for the lease model continues to increase," Edmondson said. RadioShack had offered PrimeStar Inc. satellite systems under a lease model before that company's subscriber base was sold to DirecTV.
Edmondson said that by offering two competing DBS products, RadioShack would expand the pie of satellite sales at its stores. Last year, the retailer sold about 1.1 million satellite systems, he added.
To help conserve floor space when merchandising the DBS category, RadioShack said it would encourage suppliers to deliver one set-top box that works for both providers.
There is already talk of creating a common DBS platform that would be ready to work with both DirecTV and Dish Network following the merger of EchoStar and DirecTV parent Hughes Electronics Corp.
"We can be a catalyst to help drive that," Edmondson said.
A unified DBS platform should help drive economies of scale, leading to lower equipment costs, he added.
Offering a single product line would also help to reduce consumer confusion.
Some consumers have started to ask which product it makes sense to buy pending a DBS merger, Edmondson noted.
"Potentially, we could see the consumer start to shut down until this is sorted out," he said.
By gaining national distribution through RadioShack, EchoStar has done what it set out to do through a lawsuit it filed two years ago against DirecTV and its top consumer electronics retailers, said Alpert & Associates president Mickey Alpert.
The lawsuit was dismissed last fall following the merger announcement.
SLAP AT PEGASUS
DirecTV spokesman Robert Mercer said RadioShack's decision was forced by Pegasus Communications Corp.'s "unwillingness to create a viable economic arrangement that would enable RadioShack to profitably acquire customers in Pegasus territories."
RadioShack no longer sells DirecTV hardware in Pegasus's rural markets.
Pegasus CEO Mark Pagon last week said his comapny has begun talks to work directly with hundreds of RadioShack franchisees within its territories.
Pegasus has never had a direct relationship with RadioShack's corporate offices. DirecTV stopped paying commissions to RadioShack for DirecTV sales within Pegasus territories after the reseller stopped reimbursing DirecTV, Mercer said.
Dish Network has always trailed market leader DirecTV Inc. in national distribution. DirecTV has exclusive DBS presence in Circuit City Inc. and Best Buy Stores Inc. outlets, although Best Buy subsidiary Suncoast Video began marketing Dish Network service late last year.
EchoStar also is sold in Sears Roebuck & Co. stores.