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Dish Kicks Off $9 Monthly Plan

Nashville, Tenn.— EchoStar Communications Corp. launched an aggressive new subscriber-acquisition campaign last week, strategically timed to coincide with the first wave of tax refund checks sent out by the Internal Revenue Service, EchoStar chairman Charlie Ergen said.

Most U.S. households should receive tax refunds ranging from $300 to $600 over the next six weeks.

On Aug. 1, EchoStar began offering new customers its 118-channel Dish Network Top 100 programming package for $9 a month, as long as they paid $199 or more for their new satellite system.

"We want to go back to a model where people pay for the hardware," Ergen told reporters at the Satellite Broadcasting and Communications Association convention here. He added that the customer who pays $200 up front for equipment is less likely to churn.

DirecTV Inc. has no immediate plans to respond in kind to DirecTV's aggressive programming pricing strategy.

"We have a huge differentiator with the NFL in the third quarter," DirecTV CEO Eddy Hartenstein said.

Last week, both DirecTV and the National Football League announced new third-quarter marketing campaigns to promote the NFL Sunday Ticket out-of-market sports package, coinciding with the kickoff of the league's 2001-2002 season.

Starting this month and continuing through November, the NFL plans to run television and print ads with the tagline, "Today is Sunday. Today is your day." Print ads show a man in a hot tub watching football on a big-screen TV.

DirecTV also kicked off its new third-quarter consumer promotion last week, offering new subscribers programming discounts of $300 when they buy an NFL Sunday Ticket subscription, plus Total Choice Platinum and Family Pack programming packages. The promotion lasts through Oct. 14.

The Dish Network $9 programming offer runs through Oct. 31 and lasts for one year. The regular price is $30.99 a month.

The $9-per-month promotion could open up the market to consumers who had never paid for subscription television before, said B.G. Marketing Inc. president Barbara Rhoerig.

Cable & Telecommunications Association for Marketing senior vice president of marketing Seth Morrison said that although the Dish offer is a competitive threat that cable operators will have to deal with, EchoStar runs a risk: the pricing could devalue the package in current customers' eyes.

"I'd be real concerned about churn," Morrison said.

When asked whether he was afraid he might antagonize existing subscribers who are paying full fare for the Top 100 package, Ergen replied that EchoStar plans to unveil a special offer on a Dish receiver with a built-in personal video recorder to current customers today [Aug. 6]. He declined to give specifics.

One of EchoStar's strategic goals is to build a leadership position in PVRs, Ergen said, noting that unlike DirecTV, Dish doesn't charge a monthly fee for the service.

DirecTV president Roxanne Austin said DirecTV has had discussions with its PVR partners — TiVo Inc. and Microsoft Corp.'s UltimateTV — about how to better position their services, but she said it was too early to say whether the companies would discount their monthly fees to DirecTV subscribers.

She said both TiVo and UltimateTV have more sophisticated product features not found on the Dish PVR.