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BT Saves ‘Millions’ In PanAmSat Deal

By | September 25, 2002

      BT Broadcast Services is extending its collaboration with PanAmSat only weeks after the two parties announced a strategic alliance for the distribution of digital video services in Europe, the United States and other markets.

      Tom Eaton, PanAmSat’s executive vice president, global sales and marketing, told Interspace, “We are working to extend our relationship with BT Broadcast Services and hope to sign a new contract shortly.”

      For BT, gaining access to PanAmSat’s extensive satellite neighborhoods and teleports was a key to the original deal. The collaboration with PanAmSat gives BT far greater satellite reach in the United States to deliver terrestrial and satellite-based multimedia transmission solutions along with content and customer management services.

      According to BT Broadcast Services Managing Director Mark Smith, the deal with PanAmSat will ultimately save the company a considerable sum of money because it will no longer need to spend huge amounts to build out infrastructure in the U.S. market. Smith told Interspace: “There are obvious cost savings. How much would it cost to build a Napa Valley ground station? Now, we wouldn’t need to build one that big to begin with, but certainly we would be looking at building additional antennae in the near future. An antenna costs between $5 million to $10 million. Over the long-term, this will save us tens of millions of dollars.”

      Despite the savings, Smith is insistent this was not the only reason the deal was done. He admitted that with the advertising slowdown, the deal is a critical one for BT. “The savings alone are not the reason for doing the deal. The reason for doing it is that it gives us a real ability to provide very complex solutions very quickly and very easily from the capabilities we both already have without building.”

      According to Smith, the deal was reached very quickly and came over lunch in Paris with PanAmSat CEO Joseph Wright. “We found that the two sets of teams could work together and they very quickly came to what I think is a great agreement. It is a non-exclusive deal both ways. Commercially, it is not exclusive but it effectively it will be our first port of call to build those solutions and similarly for PanAmSat.”

      Intelsat Deal

      BT also announced a deal with Intelsat to provide end-to-end video solutions. The agreement will enable Intelsat to sell digital video services to end customers. Smith said of this deal, “We are effectively providing point-to-point satellite capacity using Intelsat’s birds to actually use video solutions, so things from streaming of corporate events right the way to TV coverage.”

      At the same time, Smith acknowledges that the PanAmSat partnership is more important for his firm. The advertising slowdown means BT is looking for more creative broadcasting solutions to drive revenue. “We provide solutions based on transponders and fibre. The trick of trying to get around this slowdown is that we have to provide a solution to a customer that gives him greater access to people and makes him more attractive to advertisers. The way we are doing that is for instance is using Eutelsat, PanAmSat capacity, fibre to link the two continents together, and giving those content owners the ability to stream or play out and give them multiple encoded audiences so they wouldn’t just have a TV quality audience,” Smith said.

      Despite these recent deals, Smith said he believes a move away from flat revenue growth is still some way away. “I do not believe we are going to see a significant sustained upturn for at least twelve months in this industry. I do have a concern that there are a number of satellites in the process of being launched. That is going to add to capacity in the sky. If the continued lack of demand carries on, there is only one way pricing can go.”

      –Mark Holmes

      (Mark Smith, managing director, BT Broadcast Services

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