ECHOSTAR LOOKING TO LOWER PRICE OF ITS ALL-IN-ONE HD GIFT BY XMAS

Cable operators’ confidence in the competitive primacy of their high-definition offerings could get rocked this Christmas season. During the holiday rush, electronics stores will be offering a high-definition equipment and programming package from EchoStar Communications that will include an HDTV set and set-top, satellite dish and up to a dozen HD channels, with the capability of adding up to 50 more channels as they become available. The HD package will cost $1,500 or less. The concept, according to Starz Encore president of distribution Que Spaulding, is simple: Ease the confusion consumers may experience when shopping for an HD set, and price it at a level that is hard to resist. “What [EchoStar chairman] Charlie Ergen is saying with this package is this: ‘Here is the whole enchilada. You don’t have to worry whether you need anything else when you leave the store. We have it all — the TV set, the set-top, the programming — and it’s here for you in one, neat package at a price point no one else can match. And, oh by the way, we’ll even install it for you,’” Spaulding says. “This will be huge. Cable can’t compete with that, and it will be difficult for other consumer electronics manufacturers as well.” The news of EchoStar’s upcoming marketing push doesn’t shock Patty McCaskill, Cequel III’s VP of programming, but she was surprised by the company’s decision to go back to its roots by selling expensive, proprietary equipment to consumers. “It’s a compelling offer, and it will certainly have an impact,” she says. “But it’s not without its risks to EchoStar. We’ll have to make sure we offer the best service and know all the details so we can tell customers how and when we’ll be competing in that area.” EchoStar, which has been giving consumers glimpses of what’s to come, introduced an EchoStar-manufactured HD television set at the CES show in January as well as an HD/PVR box, which won best in show in innovation at the design and engineering showcase. One executive who has worked closely with EchoStar on several projects but asked to remain anonymous says the company is trying to get the price point below $1,000 before the holiday season. EchoStar spokesman Mark Lumpkin declined to comment. In any event, the $1,500 price point is still lower than it would cost to buy the components separately. A quick check of Radio Shack’s website revealed the electronics store is selling EchoStar’s HD receiver for $500. Best Buy is selling comparable HDTV sets for between $1,500 and $1,800. “EchoStar is going to give away the razor so consumers will keep coming back for the blades,” Spaulding says. “Charlie wants consumers to buy his programming, so he’s willing to sell the equipment at a loss.” Cable operators may be best suited to offer HD long term, says CableLab’s chairman Dick Greene. But he strongly advises the industry to remain alert. EchoStar and DirectTV have been offering HD longer than cable and their products are prominently displayed in hundreds of retail stores around the country. Additionally, programmers are anxious to push their own HD agendas. ESPN, sensitive to the reaction of cable operators, tries to go easy with its Best Buy promotions in those markets that don’t offer hi-def yet, says Jeff Siegel, ESPN’s VP-affiliate sales/marketing. However, both DBS providers are ESPN HD affiliates, and they want to take advantage of ESPN’s relationship with Best Buy. “When we go into a market with our HD product promotions, we have to take a look at several factors,” Siegel says. “We have to look at the needs of Best Buy. We have to look at what our affiliates need and want. And we must figure out which markets will be the best in driving viewership for us.”