Communications Satellite Corp. has agreed tentatively to invest $100 million to $120 million in a venture to channel TV entertainment directly from satellites into American homes, a risky and as yet unproven field in which Comsat lost a comparable amount in the 1980s.
Comsat's deal is with SkyPix Corp., a small Seattle firm that plans to operate an 80-channel TV system and is now looking for financial and technical backers. SkyPix intends to begin service early next year in selected American communities, then to cover the entire country starting next summer.
Richard McGraw, a spokesman at Washington-based Comsat, said that the deal was highly tentative. It depends on SkyPix providing assurances about its technology, on another large-scale investor being signed up and a final agreement being reached. Final Federal Communications Commission certification of its equipment is also pending.
Proponents of direct broadcast satellites, or DBS, say the medium could eventually serve millions of homes that would be equipped with small, low-cost satellite dishes. It would provide another entertainment alternative to broadcast and cable television, as well as to videocassette rentals.
Brian McCauley, president of SkyPix, said major Hollywood studios had agreed to provide films. "Any time you turn on your set, you'll be able to choose from 40 to 50 movie channels," he said. Sports, news, "superstations," children's programs and other material would also be offered, the company said.
SkyPix has said its dishes, measuring two to three feet in diameter, will have a suggested retail price of $699. The basic service will cost $12.95 a month, McCauley said, though consumers will pay for movies on a per-view basis, about $3 to $4 for first-run films.
Europe and Japan have already embarked on DBS services. In the United States, however, the systems have yet to get off the ground, despite long planning. Shortages of programming, high costs of satellites and dishes and competition from the established forms of TV have all been cited by skeptics as reasons why DBS won't be widely accepted.
Ten years ago, Comsat ordered two DBS satellites. But, with the satellites partly built, it canceled when the market failed to firm up. In 1984 and 1985 it took a combined after-tax write-off of $116 million.
Hit also by unsuccessful ventures into manufacturing, Comsat went through a painful restructuring in the late 1980s that eventually saw it refocus on its core business of channeling international communications.
The SkyPix deal, which was reported yesterday by Satellite Business News, a trade publication, is a new sign that Comsat is again venturing out of that safe and highly regulated business. Last year, it bought the Denver Nuggets basketball team and has been trying to make its way into sports programming and new forms of entertainment delivery.
Other DBS systems could offer competition to SkyPix, though it is scheduled to be the first in operation. One includes Rupert Murdoch's News Corp., NBC and Hughes Communications Inc.; the other has cable television operators Tele-Communications Inc. and Newhouse Broadcasting.
Several million Americans, most of them in rural areas, already receive satellite transmissions directly. However, these are often interceptions of material being distributed in raw form to broadcast stations.