22.hughes/fine/dt1st/mark2nd

No. 22

Hughes Buys U.S. Satellite Broadcasting

As satellite TV companies race to grab market share from cable before it’s too late, Hughes Electronics Corp. moved last month to firm up its hold on the market with a $1.3 billion offer to buy St. Paul, Minn.-based U.S. Satellite Broadcasting Co.

If approved by shareholders and regulators, the deal will give Hughes’ DirecTV, already the nation’s biggest satellite TV service, a greater reach in the industry, more satellite slots and the ability to offer more programming. But because most USSB subscribers already subscribe to DirecTV through a joint operating agreement, it won’t boost subscriptions very much DirecTV will pick up about 200,000 new customers.

The deal is expected to close during the second quarter of 1999. It could bring an additional $900 million to DirecTV during its first full year, boosting total DirecTV revenues to $1.5 billion, a 60 percent gain. This additional revenue would help offset what analysts expect will be a decline in the sign-up rate of new satellite TV subscribers, as cable companies upgrade their networks and offer additional services like connections to the Internet.

Howard Fine