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Industry News Roundup

The numbers are up for Littleton, CO-based EchoStar Communications. The direct broadcast satellite service posted a $129 million profit on sales of $1.4 billion for the second quarter ended June 30. The company also added 270,000 new subscribers in the same period, for a total of 8.8 million subscribers.

The numbers were a significant rise from the same period in 2003, when EchoStar reported $31 million profit on sales of $1.17 billion. In the most recent quarter, EchoStar's available free cash reached $151 million, almost five times the $33 million level during the same time last year. The future looks good for the company and for satellite broadcasting generally.

It may not look so sunny for Macrovision, the Silicon Valley company that made its fortune in copy-protection technology. Although Macrovision has a presence in the music and software copy-protection arena, its primary business has long been in DVD-to-VHS transfer prevention. With VHS now on the decline—this year, DVD overtook the venerable tape format for the first time in both dollar volume and unit sales—that business model may no longer apply.

With the proliferation of DVD burners and DVD recorders, Hollywood studios are increasingly unconcerned about encoding DVDs to block transfer to low-quality VHS tape, and may not update contracts with Macrovision when they come up for renewal. Additionally, studios scrambling to crank out profitable products are reluctant to spend the money on copy protection. Two such contracts are due to expire this year, and two to do so next year. Macrovision's may not have "much leverage in negotiations" according to a recent analysis in Barron's Online. Raymond James analyst Phil Leigh predicts a 20% drop in the price of Macrovision stock as a result.

Macrovision is working on a watermarking scheme to inhibit DVD-to-DVD transfers. Other analysts quoted by Barron's predict a revenue increase at Macrovision of as little as 2% this year. The DVD Copy Control Association has stalled for more than a year on agreeing to any standard for DVD-to-DVD protection.

Swan song for trade show: The annual Western Cable Show will take place for the last time in Anaheim, CA, December 2-5. The show has been a yearly event for 36 years, but has suffered declining attendance recently. Organizers from the California Cable & Telecommunications Association cited "changing conditions in the marketplace coupled with economic pressures on cable programmers, suppliers and operators" in announcing the decision Wednesday August 13.

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