SES Announces Multi-Year Agreement With Echostar

[Scott Greczkowski]

SES Announces Multi-Year Agreement With Echostar To Expand Direct-To-Home Broadcasts In Mexico And The U.S.

Wednesday, November 26th, 2008
SES Announces Multi-Year Agreement With Echostar To Expand Direct-To-Home Broadcasts In Mexico And The U.S.

EchoStar will utilitize new QuetzSat-1 satellite at 77 degrees West

BETZDORF, Luxembourg — SES S.A. (Euronext Paris and Luxembourg Stock Exchange: SESG), announced today a multi-year agreement to provide satellite capacity to EchoStar Corporation (Nasdaq: SATS). It is expected that capacity on QuetzSat-1, a new satellite, will be used by Dish México, an EchoStar joint venture, to provide direct-to-home (DTH) services in Mexico. It is further expected that EchoStar will provide capacity on QuetzSat-1 to DISH Network Corporation (Nasdaq: DISH) for use in connection with its U.S. DTH business.

SES will start the procurement process for QuetzSat-1, a Ku-band BSS satellite planned for launch into the orbital location of 77 degrees West. Rights to use this orbital position for direct broadcast services (DBS) were granted in 2005 by the Mexican government to QuetzSat S. de R.L. de C.V., a Mexican-controlled partnership that includes principals of Grupo Medcomand SES Global South America Holdings, S.L., a company held 100 percent by SES. SES Global South America Holdings, S.L holds 49% of QuetzSat S. de R.L. de C.V.

Clemente Serna Alvear, Chairman of QuetzSat, said, “This agreement builds on our 2005 winning bid for the Ku-Band DBS frequencies at 77 degrees West Longitude. It is an important step in offering greater choice and service quality for television households in both Mexico and the U.S.”

“This long-term agreement exemplifies our strategy to develop wholesale DTH platforms to maximize the range of entertainment and information services available to homes in markets around the world,” said Romain Bausch, President and CEO of SES. “It also demonstrates our commitment to develop prime DTH spectrum in the Americas.”

 

[Quantum]

Oh thank goodness. More Mexican channels...

 

[rad]

So is Echostar going to get out of the business of owning their own satellites and just lease space from others?

 

[nelson61]

Will probably be loaded with spots for US and broadbeam for Mexico. This would avoid interference problems with Canadian satellites.

 

[DishSubLA]

Oh thank goodness. More Mexican channels...

This is good news for us, too. Much of that capacity is going to be used of U.S. Dish services. That's what this is really about.

 

[Fitzie]

This is good news for us, too. Much of that capacity is going to be used of U.S. Dish services. That's what this is really about.

Exactly. An important implication is that SES believes Dish will be around for a long time to partner with SES in meeting SES's goals to be a player in the DTH market. This will help Dish meet its goal of essentially complete HD broadcast coverage by 2013 (assuming the satellite is up and running by 2011 or 2012 or so).

Although Dish and DirecTv have been rebuffed in efforts to combine, it would be really interesting and progressive if the Obama administration via a restructuring of certain oversight agencies found that collaborative utilization of satellites was not prohibited. For example, Dish might be able to broadcast all signals for both Dish and DirecTv customers in the Eastern Arc, while DirecTv did the same for the Western Arc. This would require syncronization of signal distribution (type, method of encryption, etc.) but the marketing would continue to be separate, with each firm's receivers picking up only those channels marketed by that provider. In this way, actual distribution capacity would be instantly doubled. Rather than reaching full coverage by 2013, as DirecTv and Dish have said is the current target date, full coverage could potentially be reached as early as 2010.

If the FCC or other agencies had qualms about anti-competitive issues, an authorizing order could specify that the providers could function in this way only for a period of "up to seven years, unless extended by further order of the board."

Fitzie

 

[skysurfer]

So is Echostar going to get out of the business of owning their own satellites and just lease space from others?

Echostar already leases a lot of capacity from others (SES) so this is nothign new.

Does anyone know if Dish for Mexico is going to launch on Jalopysat or is the service going to wait a few years for QuetzSat-1 to be launched and operational?

 

[rad]

Echostar already leases a lot of capacity from others (SES) so this is nothign new.

Yes, I'm aware of this. The question is does this mean that Echostar will stop building/launching/operating their own satellites going forward and go to a leasing model only?

 

[rocatman]

Yes, I'm aware of this. The question is does this mean that Echostar will stop building/launching/operating their own satellites going forward and go to a leasing model only?

It appears that Dish will continue a mixed mode but realize that most of what they are leasing for Direct To Home (DTH) service is at slots that have been allocated to other countries i.e., Canada and Mexico. I do not believe Dish could own the satellites at 129 W or 77 W for the long term based on the agreements with the Canadian and Mexican governments respectively. The same is true for 72.7 W. The Dish satellites at these slots are there only temporarily until the permananent satellites are built and launched. The Anik-F3 satellite is a Telesat satellite, a Canadian company but Dish leasing this slot is probably more of convenience with its tight location to 119 W than anything else. It has been announced that Dish is building E-14 and E-15 so they appear to continue in this mode.