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Editor’s Insight: 2000–“The Best Of Times, The Worst Of Times”

By | December 10, 2000

      This past year was a mixed bag for the satellite industry. It saw a respectable rise in the number of satellites launched and an astounding increase in the number of satellites ordered. At the same time, less money from Wall Street flowed into the sector to only a select handful of companies, as the satellite market continued to recover from the demise of low-earth-orbiting business failures. Overall, it was a year of excitement, as new markets opened and business plans were unveiled, and a year tinged with sadness, as several multi-billion-dollar systems continued to flounder, laying waste to years of hard work and technical ingenuity on the part of their founders.

      With 22 Western-built, commercial, geostationary satellites launched by early November, and six more slated before year’s end, the satellite launch rate was getting back on track in 2000, particularly during the last six months of the year. For the past two years, manufacturing delays, launch failures and political instability have led to a decrease in the launch rate to 20-23 satellites. The year 2000 was also a record-breaker in terms of new satellites ordered. By the third quarter, 37 new geostationary satellites had been contracted, a number not achieved since 1995, when that same number of deals was signed. By the end of the year, 2000 could very well turn into a record-breaker as far as new spacecraft orders are concerned.

      Wall Street, after being burdened with huge losses relating to the Iridium failure and ongoing problems at Globalstar and Orbcomm, became more circumspect when opening its wallet to the satellite industry. Not only were fewer funds disbursed, those that were available flowed to a select few. Echostar was the happy recipient in this regard. At one point, the international debt financing market was so enthusiastic about Echostar and its ability to carry a heavy debt load that demand for senior notes went far beyond Echostar’s expectations. Echostar was “forced” to increase the amount of debt it would issue from $600 million to $1 billion. Other companies were not so lucky. As a result, vendor financing is coming back in style, forcing satellite companies to put their money where their mouth is.

      Some big name changes took place in 2000. Hughes Space and Communications Co. was sold to the Boeing Co. for $3.75 billion in cash, creating Boeing Satellite Services. Comsat Corp., the U.S. signatory to Intelsat and Inmarsat, was purchased by Lockheed Martin, and its stock delisted from the New York Stock Exchange in a historical changing of the guard. At the same time, new names gained prominence. Along with Spaceway and Astrolink, satellite professionals now hear and read about companies like WildBlue and StarBand. Many of these new players, who target markets like Internet, multicasting, content distribution networks, and multimedia, represent the best and brightest areas of growth the industry has to offer.

      The year will remain a memorable one in satellite history. Along with the demise of low earth orbit systems, which seem to have temporarily fallen out of vogue, the industry presented plenty of new opportunities for profit and new ways to link the peoples of the world from 228 “relay towers” 36,000 km above the Equator.

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