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Digital TV

Digital TV. Presented by Peter Chan to the Maxidigm Investment Club Mar. 16, 2007. Background. Digital TV Services: DBS - Direct Broadcast Satellite Digital Cable Market Share in US: DBS – 30% Cable – 70% Accounts for 85% of TV households. Big Players. Satellite: DirectTV

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Digital TV

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  1. Digital TV Presented by Peter Chan to the Maxidigm Investment Club Mar. 16, 2007

  2. Background • Digital TV Services: • DBS - Direct Broadcast Satellite • Digital Cable • Market Share in US: • DBS – 30% • Cable – 70% • Accounts for 85% of TV households

  3. Big Players • Satellite: • DirectTV • EchoStar • Cable: • Time Warner Cable • Comcast • Shaw • NASPERS

  4. DIRECTV Group Inc (DTV) • Largest U.S. provider of Direct Broadcast Satellite (DBS) television • Subscribers: 16M (US), 2.7M (Latin America) • Founded in 1977 • Market capitalization: $27.8B

  5. DIRECTV Group Inc (DTV) • Company Direction: • Aggressive expansion of local and national HD offerings • Transition from MPGE-2 to MPEG-4 HD and DVR receivers • 2 additional satellites to be launched • Offers service bundled with broadband and voice services from telephone companies (e.g. Verizon)

  6. DIRECTV Group Inc (DTV) • Risk assessment: • Ample financial flexibility • Projected acceleration of cash flow • Increased competition from cable operator’s bundled offerings

  7. EchoStar Communications (DISH) • Second largest U.S. provider of Direct Broadcast Satellite (DBS) television • Subscribers: 12.7M+ (US) • Founded in 1993 • Market capitalization: $19B

  8. EchoStar Communications (DISH) • Company Direction: • Marketing “lowest all-digital price in America” • Offering advanced HDDVR • Transition from MPGE-2 to MPEG-4 HD and DVR receivers • 6 additional satellites to be added by 2009 • Offers service bundled with broadband and voice services from AT&T

  9. EchoStar Communications (DISH) • Risk assessment: • Stronger than expected 3rd quarter subscriber growth •  Strong financial condition • Potential merger with DirectTV speculation • Infringed TIVO patent in DVR technology and up to $18M penalty may be needed • Increased competition from cable operator’s bundled offerings

  10. NASPERS (NPSN) • Based in South Africa • Multinational media company primarily in South Africa • 2 Business Units: Electronic and Print Media • Electronic: Pay television, Internet, and instant messaging subscriber platforms • Founded in 1915 • Market capitalization: $7.0B

  11. Shaw Communications (SJR.B-T) • Second largest cable operator in Canada • Subscribers: • Cable: 2.19M+ (BC, AB, SK, MN) • Satellite: 869K (through Starchoice) • Market capitalization: $7.7B (US) • Dividend: $1 - $1.3 by end of FY2007

  12. Shaw Communications (SJR.B-T) • Company Direction: • Cable division: (core business) provides 200+ channels • Satellite division: • Direct-to-Home - Through wholly owned Shaw Satellite Services Inc., the company owns Star Choice Communications Inc. which offers over 430 digital subscription programming channels • Distribution Services - Shaw Broadcast Services redistributes television and radio signals via satellite to cable/system operators

  13. Shaw Communications (SJR.B-T) • Risk assessment: • Dividend increase • Star Choice loses money in an attempt to gain satellite subscribers • More aggressive pricing from Telus

  14. Revenues & Earnings www.quicken.com Revenues Earnings

  15. Smaller/Foreign TV Providers • Net Servios de Comunicao (Latin America) • i-CABLE (Hong Kong) • NDS Group (UK)

  16. NET Servicos de Communicacao (NETC) • Latin America’s largest pay TV service provider • Brazil’s 4th largest broadband service provider • Market share: 37% Brazil’s pay TV subscribers • Subscribers: 1.73M+ • Market capitalization: $3.5B (US)

  17. NET Servicos de Communicacao (NETC) • Company Direction: • Aim to become Brazil’s leading provider of entertainment and communication services • Focus on driving further peneration of the Net Virtua high-speed data business

  18. NET Servicos de Communicacao (NETC) • Risk assessment: • Good Q4 subscriber gains across product lines • Vivax acquisition • Political instability in Brazil and others in Latin America • Stiffer competition from DSL offering by telecommunication companies

  19. i-CABLE Communic ADS (ICAB) • Hong Kong’s second largest residential broadband ISP • Provided access and maintenance services to 211,000+ satellite television system households • Market capitalization: $0.47B (US) • Incorporated 1999

  20. NDS Group (NNDS) • Supplies open end-to-end digital technology and services to digital pay-television platform operators and content providers worldwide • Smart cards for set-top boxes, security maintenance service, … • Market capitalization: $2.74B (US) • Founded in 1999

  21. Revenues & Earnings www.quicken.com Revenues Earnings

  22. Conclusions • Industry consideration: • Digital Flatscreen TV replacing CRTs which drives digital programming demand • Developing countries market potential • Media center (Internet + TV through PC) gaining popularity with low bundle pricing

  23. References • Http://www.tdwaterhouse.ca/ • http://www.yahoo.com/finance

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