Intelsat Scraps Hong Kong Venture, Takes $30 Million Hit
Intelsat is paying big for ending its 51-percent participation in Galaxy Satellite TV Holdings Limited, a company with a Hong Kong direct-to-home (DTH) satellite television subsidiary, Galaxy Satellite Broadcasting Limited. The subsidiary offers local and international pay-TV programming to the Hong Kong market but the venture has been a cash drain on Intelsat. As a result, a related existing agreement for Intelsat’s in-kind contribution of satellite capacity on the IS-709 satellite will end on March 31, 2005. Intelsat’s financial results for the period ended Sept. 30, 2004, will reflect a non-cash charge of approximately $30 million to write down the Galaxy investment.
Intelsat’s partner in the Galaxy business, TVB, will acquire Intelsat’s share in the joint venture. TVB also agreed to release Intelsat from any future cash contributions.
“We continue to believe that Galaxy’s service offering represents an attractive alternative for pay-TV subscribers in Hong Kong,” said Conny Kullman, Intelsat’s CEO, in a prepared statement. “Galaxy’s growth has been slower than anticipated, however, and it is not in Intelsat’s strategic interest to invest additional resources and management time on this business.”