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Satellite Explosion May Stall DirecTV’s HD Push

This week’s explosion of a Dutch satellite may ultimately wind up delaying DirecTV’s aggressive plans to expand its HDTV offering this year, according to a Wall Street analyst.

On Tuesday, a $300 million New Skies-8 satellite exploded when it was being launched from a Sea Launch floating platform.

“Though the satellite in question was not the property of DirecTV, the event could cause a material delay to certain components of DirecTV’s HDTV strategy,” Craig Moffett, an analyst with Sanford C. Bernstein, wrote in a note Wednesday.

“Any delay in DirecTV's HDTV strategy is an incremental negative for the company,” he wrote. “But the impact is likely smaller than initial reports may have suggested [some had predicted a delay of DirecTV's HD capacity until 2008]. Having to delay expanding their HD locals footprint is clearly a setback, but we believe the impact is likely to be relatively modest.”

EchoStar Communications also has an agreement to use Sea Launch to launch its EchoStar XI satellite this year. That would be Sea Launch’s third liftoff for EchoStar, following EchoStar in 2003 and EchoStar X a year ago.

"With the DirecTV 10 satellite scheduled to launch in June aboard a Proton rocket at the Baikonur Cosmodrome in Kazakhstan, we're moving forward with our plans to roll out more HD channels this year," DirecTV said in a prepared statement. "It's too early to predict how long the Sea Launch rocket failure will delay the D11 launch. However, we have a flexible, robust fleet of satellites and a variety of options available to us to continue our national and local HD rollout."

EchoStar said it was studying its options.

“We are evaluating a variety of potential scenarios and options at this time,” said Kathie Gonzalez, EchoStar’s director of corporate communications.

DirecTV -- which unveiled plans to offer 100 national HDTV channels at the Consumer Electronics Show last month -- is launching two birds this year that will help bolster its HDTV offerings: DirecTV-10 and DirecTV-11.

The first satellite, DirecTV-10, will be launched from the ground in June, as planned, according to Moffett.

“The second of those two satellites, DirecTV-11, was to be launched from the Sea Launch platform,” Moffett wrote. “On its own, DirecTV-10 should have sufficient capacity to deliver dozens of national HD channels, as recently promised at CES. It is likely that the launch of DirecTV-11, which is scheduled for an ocean launch by Sea Launch, will be delayed, however.”

According to Moffett, “A launch delay would limit the rate at which DirecTV can expand availability of local HD channels, according to the company. DirecTV is looking at other launching options for DirecTV-11, although it’s unclear whether it will be able to secure an alternative launch slot.”