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DBS Players Fight for Expatriate Subscribers

DirecTv Inc. and EchoStarCommunications Corp. face a heated battle in the months ahead to sign upforeign-language programmers and ethnic-American subscribers. Both companies are addingnew channels -- and new channel capacity -- to help target the millions of expatriatesliving in the U.S. who are hungry for programming in their native tongue.

"There's an overwhelming appreciation that thisprogramming is even available," said Michael Schwimmer, vice president of programmingfor EchoStar.

The direct-broadcast satellite company has been an earlyproponent of foreign-language programming, offering Spanish, Greek, Arabic, Italian andCroatian services for nearly two years. Earlier this month, the company said it is addingJapanese-, French- and Portuguese-language services.

The newly introduced channels, as well as any otherforeign-language services EchoStar launches in the future, will be delivered fromEchoStar's third or fourth satellites. Subscribers who buy both the new ethnicservices and the core Dish Network programming will need two DBS dishes.

DirecTv, too, is launching its new foreign-languageservices from a new satellite, the Galaxy III-R satellite that it will lease fromPanAmSat. Its first services there are set to launch in May or June, according to LarryChapman, executive vice president for DirecTv.

Subscribers would need a new, slightly larger dish and anupgraded receiver for the new ethnic services, which initially feature Russian, Asian,Ukrainian, Italian and Arabic languages.

Getting the necessary equipment won't be enough tohold back subscribers, who wouldn't be able to access the channels any other way,said industry executives.

According to Rick Moe, chief operating office for EthnicAmerican Broadcasting Company (EABC), which will be supplying ethnic programming toDirecTv, expatriates living in the U.S. make very good pay TV customers. "They wantthat programming," he said, "and they'll do just about anything to getit."

"We just don't have churn," Moe added."The leading cause of churn is people dying."

DBS companies hope to take advantage of that type ofconsumer loyalty as a way to beef up its subscriber base. It offers recent immigrants aswell as second- and third-generation ethnic audiences a compelling reason to choose DBSover cable, and even to choose one DBS company over another.

Schwimmer said "the vast majority" offoreign-language subscribers also subscribe to core programming from Dish Network'sEnglish-language channels.

In any case, the foreign-language market is, in itself, ahealthy one. According to Moe, "Rates are higher for ethnic channels than for mostpremium channels."

EABC also supplies ethnic programming to the cabletelevision market. The company has broken the country down into lists of relevant ethnicclusters to help cable operators decide which channels to market.

Where individual markets are heavily concentrated with acertain ethnic population, it makes sense for cable to offer such services, especially ifmany target subscribers are in apartment buildings. DBS companies still have an easiertime signing up customers living in single-family residences.

Schwimmer said one factor that makes the demographics forthe Brazilian-American market so attractive is that there is a high concentration ofresidents in single-family homes. EchoStar plans to add a Brazilian service later thisyear.

Through EABC and other distributors, DirecTv has gone afterthe multiple-dwelling-unit (MDU) market more aggressively in the past year or so. Chapmansaid this will give DirecTv an edge over EchoStar in marketing to certain ethnic groupsthat have a higher percentage of families living in MDUs.

Chapman predicted that more cable operators would addforeign-language channels once they add channel capacity. He plans to make sure thatDirecTv is well-positioned with its own ethnic services before cable moves to digital on awide-scale basis.

"The beauty of satellite is our ability to aggregatevery thin audiences to create a viable business plan nationwide," Chapman added.

DirecTv and EchoStar have only hit the surface with theirforeign-language services. Both are wooing -- and being wooed by -- programmers all overthe world.

At EchoStar, current and potential subscribers are puttingin their two-cents worth.

"I get e-mail from people saying, 'I heard youlaunched Portuguese; now could you launch Dutch?'" said Schwimmer.

Moe said that when EABC is looking at a new programmer, thefirst criteria is target demographics, such as: "What are the sheer numbers, whereare they and can we service them adequately?"

EABC also looks for programmers who will support EABC andDirecTv with ethnic-specific marketing.

"Marketing is totally individual for each ethniccommunity," Moe said.

And marketing a single channel in a particular languagemight not be enough to satisfy all potential subscribers who speak that language.

"Country of origin is very important," saidSchwimmer. "Someone from Brazil is interested in Portuguese programming, but it needsto be Brazilian. The sense of humor and even the dialect is different from one country tothe next."

That's why popular American channels will always dobetter in the United States than will BBC America, no matter how good the productionvalue. "The question is," said Schwimmer, "does it resonate with thespecific culture?"

That's not to say there isn't a market for BBCAmerica on DBS. DirecTv and EchoStar are both looking at carrying the service, althoughit's not clear yet whether BBC America's distributor, Discovery CommunicationsInc., would require the DBS companies to carry the service within their core programmingpackages on their primary satellites.

While BBC America is likely to ultimately gain carriageacross the various DBS platforms, industry executives believe most ethnic services willremain exclusive to a specific company. That's because most of the marketing is doneby the programmers, who would find it less expensive to put their resources behind asingle DBS delivery service.