U.S. Satellite Broadcasting last week reported that its net
loss for the quarter ended March 31 was down from $22.5 million in 1997 to $9.1 million
Revenues increased to $136.8 million for the quarter,
compared with $99.2 million in the prior-year period.
Stanley E. Hubbard, USSB's president and CEO, said the
strong performance of the Digital Satellite System category helped USSB to achieve
positive cash flow for the quarter. While Hubbard doesn't expect to reach cash-flow
positive for the entire year, he said, USSB is on track to reach positive cash flow in
1999 and to report net income by 2000.
USSB lost approximately 72,000 subscribers during the
quarter, after USSB and DirecTv Inc. implemented their channel-integration program.
DirecTv added former USSB basic channels into its lineup, leaving USSB to concentrate its
efforts on premium and pay-per-view programming.
"We lost the low-margin, basic-only subscribers that
we expected to lose," Hubbard said. Even with the loss, however, USSB posted a net of
59,000 new subscribers during the quarter, for a total of nearly 1.8 million paying
subscribers at the end of March.
It's too early to say how much future churn will be
attributed to the changes in the channel lineup. During the implementation, Hubbard said,
USSB sent messages to all of its customers, asking them to re-evaluate their programming
Hubbard said USSB lowered its objectives for monthly
per-subscriber revenue by about $1 after losing its basic channels. Monthly per-subscriber
revenue for the quarter was $24.22.
As the DSS subscriber base continues to grow, USSB's
financial performance has also improved, Hubbard said. DirecTv and USSB have expanded
their distribution base through agreements with telephone companies such as SBC
Communications Inc. and Bell Atlantic Corp., and USSB is still negotiating with GTE Corp.
Hubbard said he doesn't expect to see any measurable impact on performance from the
phone companies until at least the third quarter.
DirecTv and USSB have both committed funds to help support
their $100 programming-discount offer that is now on the table. Hubbard said the bulk of
the money goes to national advertising, retail-support materials and training. USSB
typically offers new DSS customers one free month of USSB programming.