DirecTV, EchoStar Report 39% Boost in Satellite TV Subscribers

The nation’s two satellite television services reported subscriber growth of 39% in 1999, giving them 11.4 million customers combined, or about 15% of the pay TV market after five years in business.

DirecTV, a unit of El Segundo-based Hughes Electronics Corp., added 1.8 million subscribers in 1999, bringing its total to 8 million customers, while second-ranked EchoStar Communications Corp. added 1.5 million customers, for a 3.4-million total.

The satellite services had a particularly strong December, with DirecTV adding 225,000, up from 183,000 in December 1998, and EchoStar adding 160,000 customers, up from 130,000 the previous December.

The companies were expected to have a record-breaking holiday season because of legislation that went into effect after Thanksgiving giving satellite TV services the rights to offer local broadcast signals to their customers. Both services have rolled out a package of five local channels for about $6 a month in the nation’s top 20 cities, helping lift sales over the critical holiday selling season.

“We haven’t scratched the surface,” said Vijay Jayant, an analyst at Bear Stearns, referring to the growth potential of satellite TV resulting from the new powers. “DirecTV would have done better in December had they had more boxes to sell.”

Many retailers said they sold out of satellite TV equipment because of the increased demand.

Analysts are projecting another record year for satellite TV companies in 2000 as they tap the full potential of the new rights to take customers away from cable.

Despite the record gains and rosy prospects, investors drove down EchoStar’s stock $9.19, or 10%, to close at $82.19 on Nasdaq. Hughes Electronics shares fell 44 cents to close at $94.88 on the New York Stock Exchange.

“EchoStar set high expectations for Wall Street, and some investors perceived its December numbers as soft,” Jayant said. He said EchoStar also informed Wall Street on Thursday that it would no longer report subscriber growth on a monthly basis but, rather, quarterly.

He said some investors interpreted the move as a way to mask tapering growth after a period of consolidation during the last year that resulted in brisk subscriber gains.