DirectTV Plans to Regain Market Share With Bond Issue

Computergram International, August 24, 1999

The Japanese wing of DirecTV, a communications satellite broadcasting service, is masterminding a bond issue worth up to 35 billion yen ($310 m) to bolster working capital and underpin an aggressive drive to snatch customers back from dominant Japanese satellite-based digital TV service provider Sky PerfecTV.

The funding bid is a bold attempt to arrest DirecTV Japan Management Inc's sluggish growth rate, outstripped more than five times by rival Japan Digital Broadcasting Services Inc-run Sky PerfecTV which is snapping up 60,000 subscribers a month.

DirecTV finds itself with only 300,000 subscribers, 18 months after launching in December 1997 - way below the 1.2 million it needs to break even. The company secured 66 billion yen from shareholders before launching, but this ran out in spring and it has had to subsist on stopgap funds from Citibank and debt guarantees from Hughes Electronics since then. Major shareholders expected to subscribe to the convertible bond issue said to be worth between $266 and $310m include Hughes Electronics Corp, Matsushita Electronics Industrial Co and Space Communications Co.

DirecTV is also pinning hopes on a new satellite slated for launch in 2000, to be stationed at the same position as satellites used by the Japanese Broadcasting Corp (NHK) and WOWOW Japan Satellite Broadcasting Inc to beam analogue signals. This will enable DirecTV to offer a single receiver to pick up digital and analog signals. At the moment DirecTV viewers need to buy special antenna/receiver sets. The innovation will put DirecTV to claim up to 20% of NHK or WOWOW viewers.