Satellites Dish out Challenge to Cable: Price Cuts Lure Channel Surfers

Article excerpt

It's cable vs. the dish, and the dish is winning.

An upstart satellite-television company slashed the price of its dishes to $200 last month, spurring sales and escalating a war for market share with the cable-TV industry.

Dish Network, a unit of Echostar Communications Corp. of Englewood, Colo., offers consumers a satellite dish and more than 40 channels of programming - including CNN, ESPN and the Disney Channel - for $500 a year. The pizza-size dish itself now costs about the same as a VCR.

"I think you're going to see sales skyrocket after this," said David Bross, editor of Satellite News. "Clearly, this is not good news for cable."

More than 1.7 million direct-broadcast satellite dishes have been sold in the United States since they were introduced in September 1994. Another 1.5 million people subscribe to PrimeStar, a satellite service that leases dishes to consumers.

But cable, which reaches nearly 64 million U.S. households, still dominates the television landscape.

Dish Network's announcement started a shootout in Denver, where it traded potshots with the nation's largest cable company through newspaper ads.

Tele-Communications Inc. fired the first shot by running ads pointing out that Dish Network can't offer local news and that consumers must install their own antennae to receive local broadcast signals.

"Since when has the same company that has raised its rates over 20 percent a few short months ago become your consumer advocate?" retorted Carl Vogel, president of Dish Network.

DirecTV responded to Dish Network last week by offering $200 rebates to new dish buyers who pay in advance for a year's worth of programming that would ordinarily cost $354.95 to $538.95.

DirecTV and U.S. Satellite Broadcasting, the two largest suppliers of satellite programming, offer complementary channel packages; subscribers pay as little as $7.95 a month for USSB's basic package or as much as $79.90 for both services' high-end offerings. A la carte programming can push the bill still higher.

The dishes required for DirecTV and USSB programming start at about $400.

"We started the business and built it up. We were not going to let a competitor come in and take away our market share," said Robert Marsocci, a DirecTV spokesman.

The satellite price wars come as cable companies continue to raise prices. Cable rates jumped at an annual rate of 10.4 percent through July, according to the Bureau of Labor Statistics.

The telecommunications reform law signed in February freed cable companies to raise rates, but Congress hoped competition from satellites and telephone companies would hold down prices. …