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DirecTV Plans 70 HD Nets

DirecTV revealed more about its high-definition expansion last week, outlining plans to have more than 70 HDTV channels when it launches its new package at the close of the third quarter, en route to offering 100 enhanced services by year-end.

DirecTV, now with 16.3 million subscribers, has deals for 90 HDTV networks at this juncture, and is working on more. But not all of those services will have launched by the time DirecTV jump-starts its high-definition platform, DirecTV CEO Chase Carey said during the satellite provider's second-quarter conference call last Thursday.

“It looks like we have 20 or 30 channels that are going to need a couple of months to get an HD feed online, which is why we'll grow from 70 to over 100 in those few months,” Carey said.

“More is more … I think there's a magic to having a unique volume,” he added. “I think there is a critical mass that is important.”

Last week, it was also disclosed that Carey has agreed to a new three-year employment contract that will keep him at the leading direct-broadcast satellite provider until 2010. That means he will continue at the helm even after News Corp. sells its stake to Liberty Media.

“We are pleased that DirecTV will continue to benefit from Chase's strong leadership,” Liberty Media chairman John Malone said in a statement.

In the second quarter, DirecTV saw a net gain of 128,000 subscribers, up from the gain of 125,000 subscribers in the year-ago quarter. The satellite company's distribution count now totals 16.3 million homes.

Last week, Carey said that DirecTV's HDTV expansion won't increase programming costs, since the satellite provider is negotiating HDTV rights when it does its traditional linear deals.

He added that he believed that DirecTV's aggressive ad campaign relating to HDTV been successful.

“Our competitors have spent an awful lot of energy in the past three or four months trying to refute or muddy the waters about the advantages we're going to have,” Carey said.

Two of DirecTV's commercials prompted a false-advertising lawsuit by Time Warner Cable. DirecTV and Time Warner Cable said last Thursday they that had settled that litigation. (see This Just In, page 48).

A recent satellite launch will increase DirecTV's HD capacity to 100 channels, with a second satellite later this year or early next year bringing that capacity to 150 HD national channels.

In a report, Sanford C. Bernstein & Co. analyst Craig Moffett indicated that DirecTV has more work ahead of it in the HD race.

“We continue to believe that [DirecTV] will have to accelerate its spending even faster than it already has if it is going to deliver on its promise to be the 'best' in HDTV,” he wrote. “We estimate that as of 2Q07, DirecTV's HDTV penetration was just 14%, compared to 32% at Comcast” as a percentage of digital subscribers.

DirecTV this fall will also be debuting its video on-demand offering, using a broadband and hard-drive connection.

“It's a wide range of selection,” Carey said.