# Downgrades for Satellite TV Sector



## Chris Blount (Jun 22, 2001)

On Thursday, Craig Moffett of Bernstein Research downgraded the stocks of both major satellite TV players, DirecTV and EchoStar, citing the anticipation of increased spending on subscriber acquisition costs and retention marketing. 
Moffett downgraded EchoStar from "outperform" to "market perform," and lowered the target price on DISH shares to $35. He also lowered his rating on DirecTV from "market perform" to "underperform," and lowered his target price on DTV shares to $14.50.

With DirecTV, Moffett said during the next few months the company could see a significant increase in costs associated with advanced set-top boxes. "We believe the required customer equipment upgrades are reminiscent of the investment cycle at BSkyB, which was greeted with a dramatic sell-off in BSkyB shares when announced by BSkyB in 2004," he said in a research note.

Moffett also said DirecTV's competitiveness could be challenged by cable's VoIP-driven triple play bundles and the eventual entry into the video market by telcos. "We believe these competitive forces will result in slower-than-consensus growth and higher-than-consensus churn," he said.

As for EchoStar, Moffett said SAC and retention marketing costs could start to increase going into 2006 due to rising DVR subsidies and an increased uptake of HDTV. And just like DirecTV, the analyst said EchoStar faces longer-term strategic challenges from cable and its triple-play bundles.

http://www.skyreport.com (Used with permission)


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## AllieVi (Apr 10, 2002)

The fiber roll-out by Verizon (and eventually others) is going to be a real challenge for the satellite companies in the long run. It's digital with tons of capacity. Once available, I expect people in fiber-served areas won't find many satellite advantages and many will be removing dishes from their roofs. Satellite will still rule in the more rural areas, of course, but my suburban area has lots of dishes even though cable is available. Those folks will be tempted by the fiber offerings.

More on this at:

http://www.dbstalk.com/showthread.php?t=45798


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## ocnier (May 8, 2003)

I still think there will be just as much a bandwidth issue for FIOS in terms of the connection downlink (i.e. the actuall satellite transmission) as there will be for D* & E*. Only time will tell. Fios and the telcos are still in there infancy and there's a lot ground & legality to cover. SBC is going through trench warfare in the texas state senate right now.


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## AllieVi (Apr 10, 2002)

ocnier said:


> I still think there will be just as much a bandwidth issue for FIOS in terms of the connection downlink (i.e. the actuall satellite transmission) as there will be for D* & E*. Only time will tell. Fios and the telcos are still in there infancy and there's a lot ground & legality to cover. SBC is going through trench warfare in the texas state senate right now.


If the telcos were limited to receiving programming via satellite, I would agree. But these companies have lots of fiber in place for long-distance communications. They may not need to rely on satellite links.

Something else may be possible with a fiber system. Instead of having the channel selection function in the home, it could be at the telco office. That way, the fiber to the home would not have to pass every channel the telco offers - just the ones that the customer currently chooses to view. It's an interesting thought. This capability isn't practical with cable systems, but fiber changes some of the rules.


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## leww37334 (Sep 19, 2005)

re Downgrades for Satellite TV Sector 

Here's an interesting question. Has anyone thought about what Katrina did to cable runs on the Gulf coast? Now when people start to return to normal there and want TV service, how long will it take to get cable restrung? How long will it take to set up a satellite dish? Isn't it possible that satellite service may get a huge new customer base in that area? Will that have an effect on satellite stock prices?


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