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Satellite biz launches war on wire

While the cable industry may chuckle, the direct broadcast satellite business is serious about giving the wired world a run for its money. Later this year, two such services will launch, one backed by General Motors/Hughes Communications and the other by Hubbard Broadcasting. Both were pitching their service at the National Assn. of Broadcasters conference here.

Both are betting hundreds of millions of dollars that satellites can cut into a piece of the cable industry’s revenue and force the information highway to take a detour to the sky. Cable industry execs usually counter that the satellite dishes will only appeal to those consumers in areas where no cable is available and broadcast signals are weak.

“There are misconceptions about the direct broadcast satellite business,” said Mickey Alpert, president, Alpert & Associates, a DBS consulting firm, “they call it a rural business — a niche service — and say that the dish is too expensive.”

While dishes will run $ 700 at launch, that price should come down as more people sign up for the service. Programming won’t be a problem; both GM’s DirecTV Inc. and Stanley S. Hubbard’s USSB have programming agreements with all the major cable channels, including pay services such as HBO. With DBS, consumers will be able to buy HBO without buying basic cable services.

That, Hubbard said, will lure viewers tired of dealing with cable companies. Another plus, he said, is that the DBS industry does not have to deal with local governments or franchise fees the way the cable industry does.

Besides much of the current programming on cable, DBS carriers will also have their own 24-hour news channel run by a partnership between Viacom and Conus Communications. That channel will be exclusive to DBS since it has no cable carriage because of CNN — which is part-owned by some of the nation’s largest cable operators who have a vested interest in its success.

As for the high prices, Hubbard points out that the first VCRs and CD players also were very costly.

According to research done by both companies, there are 6 million-8 million people willing to buy a dish right now. Hubbard projects 50 million subscribers to DBS in less than 10 years.

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