Communications Satellite Corp. yesterday announced plans to spend at least $683 million to begin the nation's first direct satellite-to-home broadcasting service, a three-channel system that could become the fourth major television network.
Officials of the Washington-based corporation said that a six-month-old subsidiary, Satellite Television Corp., could be operating within three to four years after receiving authorization from the Federal Communications Commission. The company applied for the FCC go-ahead early yesterday.
Operating without commercials on subscriber revenues, the subsidiary plans to have one channel offering general entertainment, including movies, concerts and theater events; a second channel showing movie "classics," childrens shows, arts, cultural and public affairs programming, and a third channel with sports, adult education, lectures and "experimental theater.
John Johnson, STC's chairman, said studies prepared for the company and the broadcasting industry indicate that STC should not dramatically alter network viewing. Johnson said STC is seeking as its primary audience people located in areas without cable television service, although the STC programming would be available for distribution via cable systems.
The company's FCC application proposes an ambitious 400-hour-a-week programming schedule, including a weekly three-hour "Theater Special" of Broadway and Off-Broadway productions, a 60-minute "sports magazine" four or more times a week, a twice-a-day series for preschoolers that will "avoid gratuitous violence," a variety of financial, interview and news-analysis programs, and "soap box" -- summaries of congressional activities and other special-interest shows aimed at relatively narrow audiences.
STC officials estimate that it will cost about $100 to buy and install a satellite-receiving dish, about 2 1/2 feet in diameter, on the roof of a single-family home, although Johnson said apartment buildings would also be prime marketing targets.
Additional electrical equipment would also have to be attached to the rooftop position. A control box, hooked up to a conventional television set, could be purchased for $300 to $400 or rented, and the programming service would cost $14 to $18 a month.
Initially, the network will launch two satellites for the service, with one designated as a backup, and beam its programming to an eastern area, roughly equivalent to the eastern time zone.
But the regulatory fate of the Comsat proposal is murky, in light of congressional interest in a series of issues revolving around the unprecedented service, the uncertainty surrounding the direction of the Reagan administration's communications policy and bitter broadcasting industry opposition to quick governmental approval of the service.
The FCC has already begun work on a rule that would regulate the new service and officials there have said they hope to review the petition expeditiously. Yet, even STC representatives do not expect to have their service approved before the end of next year.
"Our position is there shouldn't be any authority for direct broadcast satellites (DBS) until Congress has an opportunity to hold hearings on it and decide about this and what form it should take," said John Summers, the executive vice president and general manager of the National Association of Broadcasters.
"The question that Congress has to address itself to is what will be the impact on the whole local broadcasting system," Summers said. Sen. Robert Packwood (R-Ore.), the incoming chairman of the Senate Commerce Committee, has already suggested that his committee may look at the entire issue.
The STC venture is the second major project Comsat has taken on in recent years that dramatically expands its role of provider of satellite space to a variety of international organizations to one of a direct provider of a service to the public.
Comsat, along with International Business Machines Corp. and Aetna Life & Casualty Co., is a partner in Satellite Business Systems, a satellite communications company marketing a variety of telecommunications services, primarily to large businesses. Comsat's share of the SBS start-up, which formally began with the launch of the first SBS satellite last month, is about $125 milliion.
But the STC investment is even greater. Detailed reports filed yesterday with the FCC indicate that the direct Comsat equity investment in STC will be $225 milliion. Comsat is expected to obtain the remaining financing for the project from a $400 million line of credit from the Chase Manhattan Bank.
The construction and launch of the satellites will cost about $252 million and the company plans to spend close to $107 million during the first year of operations for equipment. Also during the first year of operation, STC plans to spend $76.9 million to acquire programming -- initially from a variety of traditional sources -- before getting into the production business itself.
The company predicts that it could have 650,000 subscribers at the end of its first year of operations, who would generate $98.8 million in revenues.