Digital TV Presented by Peter Chan to the Maxidigm Investment Club Mar. 16, 2007.
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Transcript of Digital TV Presented by Peter Chan to the Maxidigm Investment Club Mar. 16, 2007.
Digital TVDigital TV
Presented by Peter Chan to the Presented by Peter Chan to the
Maxidigm Investment ClubMaxidigm Investment Club
Mar. 16, 2007Mar. 16, 2007
BackgroundBackground
Digital TV Services:Digital TV Services:• DBS - Direct Broadcast Satellite DBS - Direct Broadcast Satellite • Digital Cable Digital Cable
Market Share in US:Market Share in US:• DBS – 30%DBS – 30%• Cable – 70%Cable – 70%
Accounts for 85% of TV householdsAccounts for 85% of TV households
Big PlayersBig Players
Satellite: Satellite: • DirectTVDirectTV• EchoStarEchoStar
Cable: Cable: • Time Warner CableTime Warner Cable• ComcastComcast• ShawShaw• NASPERSNASPERS
DIRECTV Group Inc (DTV)DIRECTV Group Inc (DTV)
Largest U.S. provider of Direct Largest U.S. provider of Direct Broadcast Satellite (DBS) televisionBroadcast Satellite (DBS) television
Subscribers: 16M (US), 2.7M (Latin Subscribers: 16M (US), 2.7M (Latin America)America)
Founded in 1977Founded in 1977 Market capitalization: $27.8BMarket capitalization: $27.8B
DIRECTV Group Inc (DTV)DIRECTV Group Inc (DTV) Company Direction: Company Direction:
• Aggressive expansion of local and Aggressive expansion of local and national HD offeringsnational HD offerings
• Transition from MPGE-2 to MPEG-4 HD Transition from MPGE-2 to MPEG-4 HD and DVR receiversand DVR receivers
• 2 additional satellites to be launched2 additional satellites to be launched• Offers service bundled with broadband Offers service bundled with broadband
and voice services from telephone and voice services from telephone companies (e.g. Verizon)companies (e.g. Verizon)
DIRECTV Group Inc (DTV)DIRECTV Group Inc (DTV) Risk assessment: Risk assessment:
Ample financial flexibilityAmple financial flexibilityProjected acceleration of cash flowProjected acceleration of cash flowIncreased competition from cable Increased competition from cable
operator’s bundled offeringsoperator’s bundled offerings
EchoStar Communications EchoStar Communications (DISH)(DISH)
Second largest U.S. provider of Second largest U.S. provider of Direct Broadcast Satellite (DBS) Direct Broadcast Satellite (DBS) televisiontelevision
Subscribers: 12.7M+ (US)Subscribers: 12.7M+ (US) Founded in 1993Founded in 1993 Market capitalization: $19BMarket capitalization: $19B
EchoStar Communications EchoStar Communications (DISH)(DISH) Company Direction: Company Direction:
• Marketing “lowest all-digital price in Marketing “lowest all-digital price in America”America”
• Offering advanced HDDVROffering advanced HDDVR• Transition from MPGE-2 to MPEG-4 HD and Transition from MPGE-2 to MPEG-4 HD and
DVR receiversDVR receivers• 6 additional satellites to be added by 20096 additional satellites to be added by 2009• Offers service bundled with broadband Offers service bundled with broadband
and voice services from AT&Tand voice services from AT&T
EchoStar Communications EchoStar Communications (DISH)(DISH) Risk assessment: Risk assessment:
Stronger than expected 3Stronger than expected 3rdrd quarter quarter subscriber growthsubscriber growth
Strong financial conditionStrong financial conditionPotential merger with DirectTV Potential merger with DirectTV
speculationspeculationInfringed TIVO patent in DVR technology Infringed TIVO patent in DVR technology
and up to $18M penalty may be neededand up to $18M penalty may be neededIncreased competition from cable Increased competition from cable
operator’s bundled offeringsoperator’s bundled offerings
NASPERS (NPSN)NASPERS (NPSN)
Based in South AfricaBased in South Africa Multinational media company primarily in Multinational media company primarily in
South Africa South Africa 2 Business Units: Electronic and Print 2 Business Units: Electronic and Print
Media Media Electronic: Pay television, Internet, and Electronic: Pay television, Internet, and
instant messaging subscriber platforms instant messaging subscriber platforms Founded in 1915Founded in 1915 Market capitalization: $7.0BMarket capitalization: $7.0B
Shaw Communications Shaw Communications (SJR.B-T)(SJR.B-T)
Second largest cable operator in Second largest cable operator in CanadaCanada
Subscribers: Subscribers: • Cable: 2.19M+ (BC, AB, SK, MN) Cable: 2.19M+ (BC, AB, SK, MN) • Satellite: 869K (through Starchoice)Satellite: 869K (through Starchoice)
Market capitalization: $7.7B (US)Market capitalization: $7.7B (US) Dividend: $1 - $1.3 by end of Dividend: $1 - $1.3 by end of
FY2007FY2007
Shaw Communications Shaw Communications (SJR.B-T)(SJR.B-T) Company Direction: Company Direction:
• Cable division: (core business) provides Cable division: (core business) provides 200+ channels200+ channels
• Satellite division:Satellite division:– Direct-to-Home Direct-to-Home - Through wholly owned - Through wholly owned Shaw Shaw
Satellite Services Inc.Satellite Services Inc., the company owns , the company owns Star Star Choice Communications Inc.Choice Communications Inc. which offers over which offers over 430 digital subscription programming channels 430 digital subscription programming channels
– Distribution Services Distribution Services - Shaw Broadcast - Shaw Broadcast Services redistributes television and radio signals Services redistributes television and radio signals via satellite to cable/system operatorsvia satellite to cable/system operators
Shaw Communications Shaw Communications (SJR.B-T)(SJR.B-T) Risk assessment: Risk assessment:
Dividend increaseDividend increaseStar Choice loses money in an Star Choice loses money in an
attempt to gain satellite subscribersattempt to gain satellite subscribersMore aggressive pricing from TelusMore aggressive pricing from Telus
Smaller/Foreign TV Smaller/Foreign TV ProvidersProviders
Net Servios de Comunicao Net Servios de Comunicao (Latin America)(Latin America)
i-CABLE (Hong Kong)i-CABLE (Hong Kong) NDS Group (UK)NDS Group (UK)
NET Servicos de NET Servicos de Communicacao (NETC)Communicacao (NETC)
Latin America’s largest pay TV Latin America’s largest pay TV service providerservice provider
Brazil’s 4Brazil’s 4thth largest broadband largest broadband service providerservice provider
Market share: 37% Brazil’s pay TV Market share: 37% Brazil’s pay TV subscriberssubscribers
Subscribers: 1.73M+ Subscribers: 1.73M+ Market capitalization: $3.5B (US)Market capitalization: $3.5B (US)
NET Servicos de NET Servicos de Communicacao (NETC)Communicacao (NETC) Company Direction: Company Direction:
• Aim to become Brazil’s leading Aim to become Brazil’s leading provider of entertainment and provider of entertainment and communication servicescommunication services
• Focus on driving further peneration of Focus on driving further peneration of the Net Virtua high-speed data the Net Virtua high-speed data businessbusiness
NET Servicos de NET Servicos de Communicacao (NETC)Communicacao (NETC) Risk assessment: Risk assessment:
Good Q4 subscriber gains across Good Q4 subscriber gains across product linesproduct lines
• Vivax acquisitionVivax acquisitionPolitical instability in Brazil and Political instability in Brazil and
others in Latin Americaothers in Latin AmericaStiffer competition from DSL offering Stiffer competition from DSL offering
by telecommunication companiesby telecommunication companies
i-CABLE Communic ADS i-CABLE Communic ADS (ICAB)(ICAB)
Hong Kong’s second largest Hong Kong’s second largest residential broadband ISPresidential broadband ISP
Provided access and maintenance Provided access and maintenance services to 211,000+ satellite services to 211,000+ satellite television system households television system households
Market capitalization: $0.47B (US)Market capitalization: $0.47B (US) Incorporated 1999Incorporated 1999
NDS Group (NNDS)NDS Group (NNDS)
Supplies open end-to-end digital Supplies open end-to-end digital technology and services to digital technology and services to digital pay-television platform operators pay-television platform operators and content providers worldwideand content providers worldwide
Smart cards for set-top boxes, Smart cards for set-top boxes, security maintenance service, …security maintenance service, …
Market capitalization: $2.74B (US)Market capitalization: $2.74B (US) Founded in 1999Founded in 1999
ConclusionsConclusions Industry consideration:Industry consideration:
• Digital Flatscreen TV replacing CRTs Digital Flatscreen TV replacing CRTs which drives digital programming which drives digital programming demanddemand
• Developing countries market Developing countries market potentialpotential
• Media center (Internet + TV through Media center (Internet + TV through PC) gaining popularity with low PC) gaining popularity with low bundle pricingbundle pricing