News

DirecTV May Push Back Launch

2/08/2004 7:00 PM Eastern

Technical problems experienced with a similar satellite could force DirecTV Inc. to delay the launch of its DirecTV 7S bird, a move that could give rival direct-broadcast satellite service provider EchoStar Communications Corp. a competitive leg up in launching local-into-local broadcast TV service in several key markets.

In a research report, Lehman Bros. cable and satellite analyst Vijay Jayant said problems have developed recently with the solar array of a satellite launched Jan. 10 (Telstar 14/Estrella do Sul-1).

The bird was manufactured by Loral Space and Communications Ltd., the maker of DirecTV 7S.

Telstar 14 is operated by Loral Skynet do Brasil and will focus more than half of its power on delivering Ku-band services to Brazil.

The rest of the satellite's transponders will cover North and South America and northern areas of the Atlantic Ocean. They'll be utilized by Boeing Corp. to support its Internet-to-aircraft service.

According to Jayant's report, a faulty solar array reduces the satellite's power and its useful life.

DirecTV spokesman Robert Mercer said the company expects to meet its launch deadline.

“At this point, we are still scheduled for launch in the mid-to-late first quarter,” Mercer said. “That will be confirmed once the cause of the [DirectTV 7S] anomaly is determined.”

It is standard practice to take extra care in determining that problems that develop on one type of satellite don't affect similar satellites, according to Mercer.

“We'll see what happens from what they learn from the anomaly,” he said.

DirecTV currently offers local-into-local broadcast service to about 64 markets. The DirecTV 7S spot-beam satellite would have expanded that reach to about 106 markets across the country.

Mercer said that the 7S bird would bring 40 new markets — including Tulsa, Okla.; Spokane, Wash.; and Lexington, Ky. — into the fold, and provide additional spectrum for about 20 existing markets.

But Jayant said that because it takes four to six weeks to ship a satellite to the launch site and prepare it for launch, unless Loral clears up the anomaly in the next two weeks, DirecTV would not be able to launch the bird by its first quarter deadline.

This would be the second time the DirecTV 7S launch has been delayed. Originally set for the fourth quarter of 2003, DirecTV pushed the date back to late in the first quarter of 2004.

The 7S satellite — scheduled to occupy the 119-degree West Longitude orbital spot — is crucial for DirecTV in that it would expand its local-to-local to an additional 14.1 million households, Jayant wrote. It would also allow DirecTV to move the satellite currently in that orbital slot to 72.5 degrees West Longitude (pending Federal Communications Commission approval), opening up another 18 markets for local-to-local service.

The threat to subscriber growth lies in EchoStar's recent launch of local-to-local service in eight of those proposed DirecTV markets, representing about 2 million homes.

“The longer the delay by DirecTV 7S, the more entrenched EchoStar could become in these markets,” Jayant wrote.

While the delay could affect short-term subscriber growth, Jayant added, it should have no effect on DirecTV's long-term plans.

In an unrelated move, Hughes said on Jan. 30 that it would eliminate 50 jobs at its corporate offices and move another 30 positions to DirecTV, as part of a company-wide restructuring.

DirecTV spkesman Bob Marsocci said the positions being transferred to DirecTV are largely in the finance and human resources departments. About 50 positions will remain at Hughes corporate, he added.

September