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

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Presentation on theme: "Digital TV Presented by Peter Chan to the Maxidigm Investment Club Mar. 16, 2007."— Presentation transcript:

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

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

3 Big Players b Satellite: DirectTVDirectTV EchoStarEchoStar b Cable: Time Warner CableTime Warner Cable ComcastComcast ShawShaw NASPERSNASPERS

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

5 DIRECTV Group Inc (DTV) b Company Direction: Aggressive expansion of local and national HD offeringsAggressive expansion of local and national HD offerings Transition from MPGE-2 to MPEG-4 HD and DVR receiversTransition from MPGE-2 to MPEG-4 HD and DVR receivers 2 additional satellites to be launched2 additional satellites to be launched Offers service bundled with broadband and voice services from telephone companies (e.g. Verizon)Offers service bundled with broadband and voice services from telephone companies (e.g. Verizon)

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

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

8 EchoStar Communications (DISH) b Company Direction: Marketing “lowest all-digital price in America”Marketing “lowest all-digital price in America” Offering advanced HDDVROffering advanced HDDVR Transition from MPGE-2 to MPEG-4 HD and DVR receiversTransition from MPGE-2 to MPEG-4 HD and DVR receivers 6 additional satellites to be added by 20096 additional satellites to be added by 2009 Offers service bundled with broadband and voice services from AT&TOffers service bundled with broadband and voice services from AT&T

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

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

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

12 Shaw Communications (SJR.B-T) b Company Direction: Cable division: (core business) provides 200+ channelsCable division: (core business) provides 200+ channels Satellite division: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) b Risk assessment:  Dividend increase  Dividend increase  Star Choice loses money in an attempt to gain satellite subscribers  Star Choice loses money in an attempt to gain satellite subscribers  More aggressive pricing from Telus  More aggressive pricing from Telus

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

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

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

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

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

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

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

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

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

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

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