Rival on horizon for satcaster Sky Mexico

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MEXICO CITY -- After years of reaping huge profits as Mexico's sole satcaster, Televisa-owned Sky Mexico will apparently be facing a new competitor next year.

The new player is Grupo Pegaso, a Mexican consortium with interests in telecommunications and media content. Grupo Pegaso vp Alejandro Orvananos said in a Tuesday phone interview that he expects the new satellite TV business to be up and running by the first quarter of next year.

"We will invest $150 million over the first three years," he said. "The money comes from our company and private equity firms in Mexico and the U.S."

He declined to name the equity firms backing the new venture. The upstart satcaster's name and executive appointments will be announced at a later date.

Orvananos said his company saw a clear opportunity to enter the satellite TV business after DirecTV exited the Mexican market several years ago, leaving Sky Mexico as the only satcaster here.

After DirecTV announced it was shutting down operations in Mexico and selling its subscriber list to Sky Mexico, many of its clients were left with no choice but to migrate to the only remaining satellite TV service provider.

Since then, Sky Mexico has seen its subscriber base and sales rise steadily. With more than 1.4 million clients, Sky is Televisa's No. 2 revenue generator.

Orvananos said his company is planning to offer bundled television, Internet and telephone services, known as triple play.

Under newly established "must-carry/must-offer" rules, pay TV systems here believe they can be much more competitive with Sky Mexico and Televisa's Cablevision, one of the nation's top cable operators.

Orvananos pointed out that DirecTV did not carry Televisa's broadcast TV channels, making it difficult for the company to compete with Sky.

Still, Vector media analyst Manuel Jimenez believes Grupo Pegaso is looking to crack a tough market.

"It's a very capital-intensive business and Sky Mexico dominates the market here," he said.

Alejandro Burillo, president of Grupo Pegaso, is a second cousin of Emilio Azcarraga Jean, chairman and chief executive of Televisa.

Despite their family ties, Jimenez said he expects Grupo Pegaso to enter the market as a true competitor.
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