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Echostar and Directv merger

Started by Kevin Arnold, Wednesday Jun 26, 2002, 06:04:00 PM

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Kevin Arnold

I came across this interesting editorial piece by Roy Trumbull:

Subject: Dish (Echostar) & Direct TV Merger  
By Roy Trumbull  

When mergers take place that require government approval,  documents are posted that give a rare view into an  otherwise private world. The FCC has a trove of such  documents on its web site concerning the DBS merger.  

Dish Network has 6 million subscribers and Direct TV has  10.3 million. According to the financial page, the ripe  fruit has already been shaken from the tree. Signing up new  subscribers for the merged system will be costly.  

The primary sixty one page document with all the signatures  is a fine example of how lawyers can observe the  formalities and still say nothing. There are many promises  but they all lack specifics. The engineering exhibit is a  bit more forthcoming.  

The mega-headache is that the set top boxes for the two  systems aren't compatible. Many of Echostar's birds have  low power transponders. The high powered ones most used  across the US are at 110 and 119 degrees WL. To get local  programming from Dish Network requires an additional dish  pointed at either 61.5 or 148 degrees WL. Fewer than 5% of  their subscribers have installed a second receive dish.  

Direct TV's customers are pointed at 101 degrees WL. A few  have a dish that covers both 101 and 119 degrees WL. Even  fewer customers are equipped to also receive 110 degrees  WL. It appears that Direct TV has more useful transponders  that are high power than does Echostar.  

The two systems have a programming overlap of 300 channels.  Presumably those channels will be freed up for local into  local or pay-per-view. It's not enough channels to  accommodate all the potential local into local channels.  

Both systems are launching spot beam birds that reuse the  same frequencies in 5 to 7 ground footprints. That appears  to be the preferred method for accomplishing local into  local channels. I don't know what the energy budget is to  maintain such precise coverage.  

National programming will utilize transponders at one  orbital location while local and regional programming will  come from another. Thus the dual antenna will be the norm  for the future.  

Based upon my contact with over 6000 viewers back when  satellite waivers were required, I found that the average  viewer just wanted to get network programming and had no  loyalty or interest in local television. It remains to be  seen how many DBS customers will install the second dish. The present capacity for SDTV channels is 500 for Dish and  460 for Direct TV assuming a 10:1 compression ratio. Post  merger it is projected that the local stations in at least  one metro market in each state will be carried. Up to 12  channels total will be reserved for HDTV.  

Both Echostar and Direct TV have offered Internet access  but so far less than 1% of their subscribers have opted to  use it.  

Left out of the news headlines is the fact that Direct TV /  Hughes owns 81% of PanAmSat and it will be part of the  surviving company.  

Notes: Presently the only way a viewer in a defined metro market can watch network programming is through his local network affiliate. "Local into local" makes the affiliate available in some local markets via DBS.  

A person outside a major market who represents that he  can't receive the local affiliate can be granted a waiver  to receive a "national" feed of the network. Such feeds  come from one of the major cities. Most prized on the west  coast are eastern time zone network feeds the push the  schedule up by 3 hours.  

Many small market affiliates aren't available via local  into local and thus must either grant waiver requests or  fight a losing battle against their viewers. I believe the  rather dubious legal protection provided for the local  affiliates under the Satellite Home Viewing Act (SHIVA) as  being a pen stroke away from vanishing.  

Under the post merger plan, the viewer's will require two  dishes to get their networks (local affiliates) and  national programming. Since viewers will rebel and write to  their congressmen and DBS firms will most likely contribute  to their reelection campaigns, I've already cut to the  chase and written off local TV via DBS.  

One of the major concerns for the future is what happens  when the public becomes aware of HDTV? I recall the time at  NAB when I was in the HD exhibit area for over an hour and  then had to go back to the main hall to meet someone in the  Sony booth. The SDTV on the monitors looked awful. Should  the public develop a taste for HD, neither cable nor DBS  has anywhere near the capacity to carry more that a few HD  channels.  

Cable pushes what they call digital cable. Digital cable is  merely a way to compress from 8 to 12 SDTV signals into the  space normally occupied by one uncompressed TV signal. If  HD signals were in the 720P format, the most they could put  in a one channel space would be two channels. For 1080i  they can get only one channel of HD per channel.  

As more bandwidth is required for HD, many of the marginal  cable-only channels will disappear and there will be a  major lobbying effort to permit cable systems to drop over- the-air channels that aren't significantly viewed.  

This could get interesting. As HDTV progresses we could see the dumping of most if not all of the local channels as sat. providers reclaim space for HD offerings. I suspect there will be a demand for decent product in HD. I would guess the networks would sacrifice exclusivity of their signal for local broadcasters in order to get their programming out to the public in any way possible. If cable and Satellite can provide ABC's signal by retransmitting a national feed instead of all the nettlesome local negotiations, I think they would jump at it. Local OTA would then become semi-independant and have to compete in a vastly different market. Probably be a huge boon to local sports programming.

Kevin Arnold