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New Satellite-to-Home TV Service Due in 1993 : Broadcasting: Four firms back $1-billion Sky Cable venture. The system could carry up to 108 channels.

February 22, 1990|PAUL RICHTER | TIMES STAFF WRITER

NEW YORK — Four top media and communications companies Wednesday disclosed plans for a television service that they say will be bouncing dozens of channels off satellites and into American homes by late 1993.

National Broadcasting Co., Hughes Communications, Rupert Murdoch's News Corp. and Cablevision Systems said the $1-billion Sky Cable venture will rely on compact 12-by-18-inch receiving antennas and the most powerful commercial satellites in use. The venture first plans to focus its marketing on neighborhoods that do not have cable TV, but the service will also be available as a supplement or alternative to existing cable services.

"We're not looking to replace cable TV but to increase the selection of programming that is available," said Stephen J. Petrucci, chief executive of El Segundo-based Hughes Communications, which will supply the satellite systems.

Consumers without cable service would need to buy a receiving antenna for about $300 and pay subscription fees that would come to roughly $25 a month, Murdoch told reporters at a Manhattan press conference. Sky Cable officials hope that local cable operators in many parts of the country will agree to carry the satellite service, making it available to all of their subscribers.

These cable companies would presumably offer some Sky Cable programming as part of their basic service and would charge additional fees for those who wanted more Sky Cable channels or pay-per-view programming.

The Sky Cable system will be able to carry signals for the next generation of TV technology--called high-definition television, or HDTV--that is now under development in labs around the world. The system can carry a maximum of 108 channels and will be able to transmit digital sound, officials said.

Such TV systems, called "direct broadcast services," have so far not lived up to their original expectations and have sometimes been lampooned as "dubious broadcast services." A DBS service offered by Communications Satellite Corp. folded in 1985, and Murdoch's Sky Television venture in Europe has only now achieved a modest success after sustaining huge losses in start up.

Analysts said Sky Cable faces challenges lining up quality programming and subscribers, as well as overcoming the expected hostility of some cable operators, who are expected to view the new technology as a threat. But some cable analysts said they believe the venture has a chance of becoming an important means of delivering programming.

"I think they'll be a significant addition to the media mix," said Paul Kagan, a cable industry consultant in Carmel, Calif.

The venture's four member companies have media interests and experience that will be a plus. Murdoch's News Corp. owns Twentieth Century Fox and Fox Broadcasting, as well as Sky Television. Cablevision, a major cable operator, is co-owner with NBC of several cable programming operations, including Consumer News & Business Channel (CNBC), Bravo, Sports Channel America and 10 regional sports channels. NBC is also part owner of the Arts & Entertainment Network.

Analysts said they expect these channels to be offered on Sky Cable. NBC and Fox Network have, however, made it clear that Sky Cable will not carry their network offerings.

Sky Cable officials claim the new antenna is a key advantage of the system. Many homeowners had trouble finding space for the earlier generation of satellite TV antennas, which were 10-foot-diameter dishes. The new antennas can be leaned against windowsills.

The large dish antennas also cost $2,000 to $3,000, a price that put them out of the reach of many viewers.

Sky Cable officials said they believe they need 2 million to 3 million subscribers for the venture to break even. They said they hope to have that many subscribers by 1997.

About 20 million American homes are not reached by cable service. Some 45 million pay for cable service.

In trying to market the service, Sky Cable will run into competition from another satellite TV enterprise recently begun by NBC's parent, General Electric. GE American Communications earlier this month announced a joint venture with nine major cable operators to deliver 10 channels of programming from a GE satellite to home receivers.

That venture will use a medium-power, or KU band, satellite and will transmit the signals of "superstations," such as WOR-TV in New York, and pay-per-view programs.

Sky Cable officials predicted that the new technology would be enthusiastically embraced by television and movie studios, which are eager to find more outlets for their products.

They contended the new system might also indirectly benefit cable operators by reducing demands in Washington for re-regulation of the cable industry. Some in Congress claim greater regulation is needed because so much programming that viewers watch now enters homes through the operators' cable.

Petrucci, of Hughes, said he had spoken to several members of the Federal Communications Communications, who he said were "very enthused" at the venture's possibilities.

Hughes, which is a unit of Hughes Aircraft, benefits from the venture in several ways. The company stands to share in any profits and also will provide the three advanced-designed satellites that will be used in the venture. The satellites will be built by another division of Hughes, which in turn is a unit of General Motors Corp.

Hughes will lend the venture its initial financing of $325 million. Each of the partners will also initially contribute $75 million. Several years later, the group will jointly put up another $200 to $300 million, officials told securities analysts.

Sky Cable will receive revenues from subscriber fees, advertising and from programming that is carried by local cable operators.

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