On Nov. 14 2008, it was announced that the Eurozone (European Union Member States) had gone into recession, and on Nov. 27, the European (EU) unveiled the EU Recovery Plan which aimed to pump billions of euros into the market to boost economies throughout Europe. On Dec. 1, the National Bureau of Economic Research said the United States had been in recession since Dec. 2007, and the U.S. government enacted a stimulus bill in February valued at nearly $800 billion. While the global economy slogged through 2009, the satellite sector performed well overall and set the stage for 2010.
Financial Moves
While most analysts and executives considered the satellite sector recession-proof, or at least recession-resistant, due to strong fundamentals and long-term contracts, there were financial bumps in the road for some companies. DBSD North America, formerly known as ICO North America, a subsidiary of ICO Global Communications, filed for bankruptcy protection in the United States in May, as the U.S. MSS operator began to feel the heat. Perhaps the most high-profile bankruptcy of the year took place in June, when Sea Launch, announced its intention to seek Chapter 11 bankruptcy protection. The move caught many by surprise, says Marco Caceres, senior analyst at the Teal Group. “Their main problem was cash flow. Their costs have gone up. I read that their suppliers in Russia and Ukraine had increased the costs of their materials and services. I think that has impacted them. I don’t think it is do with lack of business. Their backlog is pretty good.” Sea Launch’s fate remains in doubt, although many hope it can emerge from bankruptcy protection to remain competitive in the launch services market. Intelsat has pledged to do all it could to help the operator. “Sea Launch is not on its own. We do not want to see liquidation,” Intelsat CEO David McGlade said during Euroconsult’s World Satellite Business Week in September.
The other major bankruptcy involved Asian satellite operator ProtoStar. The startup filed for bankruptcy in July, and the operator’s downfall, according to many, was not due to the economic gloom but rather poor management. “It shows that you can launch satellites that are not coordinated, and they can interfere with existing satellites,” Peter Jackson, AsiaSat’s CEO, said at the time of the filing. Intelsat won the bidding for the ProtoStar 1 satellite in October with a $210 million offer. ProtoStar is scheduled to auction the ProtoStar 2 satellite in December. In November, Asia Broadcast Satellite (ABS) announced that it will acquire Mabuhay Satellite Corp., gaining control of the Agila-2 satellite, built by Space Systems/Loral and launched in August 1997. The spacecraft carries C-band and Ku-band transponders that cover the Philippines, China, Taiwan and Hong Kong, and ABS also will own Mabuhay’s Subic Space Center, a satellite communications facility in the Philippines.
U.K. sports broadcaster Setanta Sports went into administration in June as the battle to compete with BSkyB for sports broadcasting rights in the United Kingdom proved too difficult. Setanta’s exit led to ESPN gaining live English Premier League soccer rights for the first time as the North American broadcasting giant aims to become more of a presence in Europe.
There were some other notable events in 2009. Not least, GlobalStar announcing in March that it received $574 million in financing from Coface, France’s export credit agency, which it can use to acquire and launch satellites. In a similar vein, O3B Networks, another much talked about newcomer, announced a similar type funding deal with Coface in September.
The year will not be particularly remembered for any groundbreaking deals, but there was some activity. The most significant move may have been unveiled in October when Viasat announced it was going to acquire WildBlue for $568 million, which would create a U.S. satellite broadband powerhouse. From a technology standpoint, Rockwell Collins made a key move in April when announced it was acquiring Datapath, a satellite-based network communication solutions provider. The deal was valued at around $130 million and gave Rockwell Collins, a defense and aerospace company, greater possibilities in the satellite communications space.
Canada’s International Datacasting Corp. made a pair of moves to strengthen its business prospects, acquiring the radio and television network product lines, including HD and SD digital video compression and decompression products, interface converters, video encoders and receivers, and satellite broadcast equipment, of Tiernan Video in August and agreeing in November to acquire select product lines and technology related to transport stream multiplexing, IP multicasting and unicasting as well as broadcast record and playback products for the terrestrial, satellite and cable broadcast markets from Logic Innovations LLC.
On the DTH side, perhaps the most significant piece of consolidation saw the two leading DTH platforms in the Middle East, Showtime Arabia and Orbit, combine in July to create a single platform to serve the region. “From an operator perspective, it puts an end to an escalation of programming costs that became somewhat irrational and somewhat disconnected from the reality of the sizes of the business,” Marc-Antoine d’Halluin, CEO of Showtime Orbit, says. “It brings some common sense into the mix from every perspective, and in addition, in the Middle East it will enable the merged entity do a far better job in fighting piracy, which is one of our major challenges in the region.”
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