DirecTV has reached the four million subscriber mark
and while the "company hardly acts like it's reshaping
showbiz," it is "doing just that," according to Robert
LaFranco of FORBES. TV producer Richard Melcombe: "They are
creating an entirely new model for television. ... I'm sure
at DirecTV they don't realize exactly how big the business
they are building will be. It's the HBO of the 1990s."
LaFranco writes that DirecTV "is incomplete as a business,"
as it expects to lose $94M on $1.6B in revenues this year.
Sales and partnerships "limit the upside," while startup
costs "are high because it must woo customers with an
equipment subsidy now up to $450." Merrill Lynch analyst
Thomas Watts said he "sees profitability in 2000." NFL
Sunday Ticket, which LaFranco calls DirecTV President Eddy
Hartenstein's "most successful offering," has "close to
700,000 customers" paying $159 for the season, and DirecTV
and the NFL split the profits. For next year, DirecTV will
air select college basketball games. LaFranco notes that
75% of DirecTV's customers have access to cable, "but chose
the satellite instead." The "typical consumer" is male, 18-
49, with an income of $40,000 or more. The average DirecTV
customer spends $540 per year on the service, while a cable
customer spends $411 a year (FORBES, 11/30 issue).
