Satellite Companies Find Growth Opportunities in Partnerships
Spurred by the challenging global economy and the rapid march of technology, satellite companies are increasingly are looking to partnerships as a way to boost their bottom lines, cut risk and find new areas for growth, panelists said Monday at SATELLITE 2010.
Particularly in tough times, companies look to work together to share risk, combine ideas and find new markets for their products and services, said Peter Shaper, CEO of CapRock Government Solutions, a Fairfax, Va.-based provider of satellite services to government agencies. He predicted satellite firms would continue looking to cooperative arrangements as the economy slowly recovers during the coming months.
Matt O’Connell, president and CEO of GeoEye, a remote sensing company based in Dulles, Va., agreed. Alliances can help companies expand their customer bases by helping them make products and services easier to understand, he said. “We’re trying to make the stuff we have more useful for our customers.”
O’Connell pointed to Google and Bloomberg as two companies that exemplify the importance of making technology accessible to users. Google Earth has increased the public’s interest in satellite imagery, and Bloomberg’s user-friendly approach to information delivery has made it easier for people to understand the financial markets, he said.
“We’re not just interested in selling pixels. We’re interested in services,” O’Connell said. “As we look to the future, I think that combining what we have with what other people have is going to become more and more useful.”
O’Connell said Google has redefined the remote sensing market and created demand for GeoEye’s services that extends beyond the traditional government market. Working with Google in the aftermath of the January earthquake in Haiti, GeoEye was able to make satellite imagery of the country available on the Internet within 24 hours, he said. “If you make [your products] easier for people, they’ll use them more. People want the information without the hassle.”
Eric Béranger, CEO of French satellite imagery provider Astrium Services, said his company is “totally built on a partnership mindset.” Béranger said Web-savvy companies skilled in making technology broadly accessible are creating new opportunities for Astrium to sell its products.
Satellite companies have also turned to acquisitions of companies in non-satellite businesses to inject growth into their operations. Dean Olmsted, chief executive of EchoStar Satellite Services, Englewood, Colo., said his company’s 2007 purchase of Sling Media Inc., a pioneer in the distribution of video programming over the Internet, has broadened EchoStar’s horizons and positioned the company in a new market, albeit an unproven one with uncertain prospects. “The core elements of our business have been growing significantly… in a recession. More people stay at home and watch television,” Olmsted said. “People are very interested in new technologies” such as the service Sling offers.
Peter Jackson, CEO of Hong Kong-based Asia Satellite Telecommunications Co. (AsiaSat), advised satellite companies that acquire or create subsidiaries to allow those units to operate independently — even if that means they lease satellite capacity from competitors. “If you create a subsidiary, don’t tie its hands,” he said.
Even as they look to partnerships to expand their markets and mitigate financial risk, satellite executives said the general economic climate they are dealing with is relatively strong.
Jackson was surprised at how well the investment climate has held up during the prolonged recession, at least for his firm. “We thought the finance situation would get worse. It got better,” he said. “I think from the financing situation globally, we seem to have blinked and missed it.”
Shaper said the rough economy has opened up opportunities for CapRock to focus on its strengths as a service provider and build its market position. “We believe great companies invest in a downturn,” he said. “We entered into a heavy phase of investment. It is about investing in services and capability so we can be that much further ahead when the markets turn around. Having been a private equity investor, it has cemented in my mind that financial strategies in this time could make a difference.”