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The Satellite News Financial Ticker

By | July 21, 2003

      Week of July 11 – 17, 2003
      Percentage Change

      Symbol
      July 17 Price
      One Week
      One Month
      Three Month
      Year to Date
      Operators
      APT SATELLITE HLDGS ATS
      3.25
      (3.0)
      55.5
      153.9
      89.0
      ASIASAT TELECOM SAT
      17.06
      (1.1)
      3.9
      20.6
      49.8
      BRITISH SKY BROADCASTING BSY
      44.13
      (2.2)
      (3.9)
      6.1
      10.2
      ECHOSTAR COMM -CL A DISH
      34.95
      (4.0)
      (3.7)
      23.9
      57.0
      HUGHES ELEC (GM -CL H) GMH
      13.38
      (2.3)
      1.6
      20.5
      25.0
      LORAL SPACE & COMM LOR
      0.40
      (86.9)
      (88.2)
      (86.7)
      (90.7)
      NEWS CORP NWS
      30.39
      (0.9)
      (5.4)
      14.2
      15.8
      NEW SKIES SATELLITES NSK
      5.25
      7.1
      (12.5)
      16.7
      26.5
      PANAMSAT SPOT
      17.48
      (6.0)
      (11.4)
      9.0
      19.4
      PASIFIK SATELIT NUSANTARA PSNRY
      0.15
      3.6
      70.6
      (44.2)
      (3.3)
      PEGASUS COMMUNICATIONS PGTV
      31.46
      (2.8)
      14.9
      63.2
      140.2
      rSTAR CORP RSTRC
      0.55
      (1.8)
      (15.4)
      83.3
      129.2
      SES GLOBAL SES.LU
      5.60
      (0.7)
      (3.3)
      5.7
      (12.5)
      SIRIUS SATELLITE RADIO SIRI
      1.67
      (9.2)
      (6.2)
      146.0
      160.9
      XM SATELLITE RADIO XMSR
      12.39
      (3.4)
      14.5
      90.6
      360.6
      Operators’ Average
      100.00
      (7.6)
      0.7
      34.9
      65.1
      Manufacturers
      ANDREW ANDW
      10.58
      (7.9)
      11.4
      70.6
      2.9
      BALL BLL
      45.00
      0.7
      (8.6)
      (19.8)
      (12.1)
      BOEING BA
      33.17
      (5.8)
      (8.9)
      24.5
      0.5
      COM DEV INTL CDV
      0.47
      (2.1)
      (11.3)
      14.6
      (21.7)
      EMS TECHNOLOGIES ELMG
      16.06
      11.0
      19.5
      35.2
      3.1
      GARMEN LTD. GRMN
      39.75
      (8.5)
      (15.2)
      2.2
      35.7
      GILAT SAT NETWORKS GILTF
      5.55
      2.8
      51.6
      23.3
      (28.8)
      GLOBECOM GCOM
      3.92
      6.5
      24.4
      42.0
      4.5
      HARRIS HRS
      29.21
      (5.7)
      (7.4)
      5.1
      11.1
      HONEYWELL HON
      27.50
      (1.9)
      (3.9)
      22.9
      14.6
      KVH KVHI
      19.91
      (16.2)
      (13.4)
      51.4
      131.5
      LOCKHEED MARTIN LMT
      50.22
      4.9
      3.1
      13.2
      (13.0)
      LUCENT TECHNOLOGIES LU
      1.61
      (18.7)
      (24.1)
      8.1
      27.8
      MOTOROLA MOT
      8.94
      (12.8)
      1.9
      14.2
      3.4
      NERA NERAY
      1.64
      0.8
      7.1
      72.0
      51.2
      ORBITAL SCIENCES ORB
      7.70
      (3.6)
      10.0
      47.2
      82.5
      QUALCOMM QCOM
      35.69
      (8.7)
      6.0
      9.1
      (1.9)
      RAYTHEON RTN
      32.43
      (0.5)
      1.0
      15.9
      5.5
      ROCKWELL COLLINS COL
      25.19
      (1.2)
      5.9
      28.5
      8.3
      SCIENTIFIC-ATLANTA SFA
      25.00
      (4.8)
      3.8
      72.5
      110.8
      SKY FRAMES SKYU
      1.45
      (9.4)
      (23.7)
      (3.3)
      (81.9)
      STM WIRELESS STMI
      0.01
      (50.0)
      900.0
      (97.5)
      TITAN TTN
      10.92
      (0.8)
      3.7
      53.8
      5.0
      TRIMBLE NAVIGATION TRMB
      24.47
      (11.3)
      (2.5)
      16.6
      95.9
      VIASAT VSAT
      13.55
      (13.4)
      (2.9)
      6.4
      17.4
      Manufacturers’ Average
      100.00
      (6.3)
      1.1
      61.0
      14.2
      Nasdaq Composite Index
      S & P 500 COMP
      1,698.02
      (2.8)
      1.9
      21.7
      27.1
      SN Stock Price Average SP50
      981.73
      (2.0)
      (2.9)
      11.6
      11.6
      100.00
      (6.8)
      1.0
      51.2
      33.3

      Wall Street Analysis

      By Tom Watts, SG Cowen Securities

      DirecTV’s results this week showed further losses in the Pegasus Communications [Nasdaq: PDTV] and NRTC territories. While DirecTV-owned subscribers rose by 181,000 to 9.94 million during the second quarter of 2003, subscribers in the Pegasus and NRTC territories fell by a combined 45,000 to total 1.6 million. Impetus is rising for DirecTV to fix the NRTC-Pegasus problem.

      The natural fix is for DirecTV to buy Pegasus and the NRTC’s rights. Even though an asset purchase appears more likely, we have analyzed what DirecTV could do to acquire Pegasus as a whole. The value and mechanism of a buyout also encompasses much uncertainty. With debt representing nearly 90 percent of Pegasus’ $1.7 billion enterprise value (EV), Pegasus’ equity value is almost irrelevant.

      Our quick analysis shows Pegasus trading for 8.7 times 2003 EV/EBITDA versus Hughes Electronics valuation of 11 times EV/EBITDA. This difference suggests DirecTV could pay above today’s $31 a share price for Pegasus. However, since debt and preferred shares makes up 90 percent of Pegasus’ enterprise value, the share price paid has almost no impact on the value of the transaction. For example, paying $50 per share instead of $31 would only raise the value of the total transaction by 6 percent. Paying $0 for the equity would only lower the value of the transaction by 10 percent.

      Value, however, will be determined largely by the lawsuit among the parties that would resolve the NRTC’s renewal rights and the rights to premium programming, among other things. With the trial scheduled to begin July 29, it may be many months before the court delivers a verdict.

      The question is whether DirecTV will take out the debt at par value or at a discount. The debt value of Pegasus also will be determined largely by the trial outcome. Until a verdict, market share losses may continue in NRTC areas, to the benefit of rival EchoStar Communications [Nasdaq: DISH] and rural cable operators. As a result, look for strong net new subscriber additions of roughly 275,000 at EchoStar when it reports second quarter 2003 results.

      Tom Watts is a managing director and satellite analyst at SG Cowen Securities. He can be reached by phone at 212/278-4260 or by e-mail at tom.watts@sgcowen.com. Readers should assume that SG Cowen Securities Corp. and/or its affiliates intend to offer services in investment banking to the above referenced companies within the next three months, and to seek compensation for such services.

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