In the end 2002 proved to be a quiet year. Despite endless talk, there was little consolidation, and certainly not any major groundbreaking deals that could be described as a signature point of the industry. Perhaps the most significant event of 2002 was the break-up (inevitable or otherwise) of the DirecTV/EchoStar deal in the U.S.

But what of 2003? Will things be different? It is likely the battle for Eutelsat will continue to dominate talk this year. U.S. heavyweights PanAmSat and Intelsat are both determined to secure the major European prize. With a complex shareholder base and a “keep Eutelsat European” movement in full swing, the deal is by no means a forgone conclusion for either Intelsat or PanAmSat, should they wish to pursue it.

For both PanAmSat and Intelsat, the Eutelsat opportunity is a major focus, as it could potentially gain them a very strong position in the lucrative European market. On paper a deal looks likely. Both PanAmSat and Intelsat want to buy, and Eutelsat’s shareholders want to sell. Eutelsat’s shareholders such as BT and France Telecom have their own issues, particularly related to 3G and debt, so selling their stakes would raise much needed capital. But, deals are seldom done on paper and this one is by no means a given.

If PanAmSat is unable to do a deal here, would it look at other European opportunities? What role would New Skies Satellites play here? Can it remain independent? The likelihood is strong that if there is no deal for Eutelsat, there may not be any at all in 2003 in the FSS sector.

In recent times, we have seen some interesting strategic combinations (Eutelsat/Hispasat), (JSAT/PanAmSat), so there may be more of the same in 2003, rather than outright acquisitions. Dan Goldberg, CEO of New Skies Satellites, told Interspace last year, “I think maybe [consolidation] is given disproportionate importance in terms of just how important it is at the end of the day.”

There will no doubt be endless speculation, but whether deals will be done is another thing entirely. Eutelsat, among others, would still like to have an IPO. Financing these possible deals is also a major issue.

In the pay-TV arena, the deals in Spain (Canal Satelite Digital/Via Digital) and in Italy, (Telepiu/Stream) should be wrapped up. All eyes will then centre on France to see whether TPS and Canal Satellite will merge. But, with Canal+ having paid a small fortune for exclusive football rights until 2007, Interspace believes a deal is less likely than it may have been a year ago. However, the argument that one European country can sustain two profitable satellite pay-TV platforms has yet to be proved, so perhaps we will see the situation in France change, although at this stage it still appears unlikely. France and Sweden are the only two major territories in Europe where there are two satellite pay-TV platforms.

In satellite manufacturing, this appears the arena more likely to see consolidation than any other. Industry leaders at PBI Media’s Satellite 2002 and Satellite Europe 2002 shared the opinion that consolidation was inevitable. But, so far the talk has led to very little activity. Certainly, a link-up between Astrium and Alcatel Space would hardly rank as one of the great surprises if it were to happen this year. While the number of satellite orders is likely to show a healthy increase from the barren 2002, it seems clear there are too many players in the market.

The conditional access (CA) arena is another that could prove an interesting one in 2003. Thomson Multimedia decided to acquire Canal+ Technologies and with the consolidation of pay-TV operators taking shape, there are restricted opportunities for vendors to provide CA systems. It remains to be seen whether France Telecom offshoot, Viaccess, has a long-term future, particularly if it loses the Modern Times Group (MTG) account.

Interspace reported on numerous occasions in 2002 that the MTG management was considering changing its CA vendor. It would be a tough loss for Viaccess. It remains to be seen how Thomson’s acquisition of Canal+ Technologies will boost its competitive offerings. NDS and Kudelski would appear the strongest players in this sector. Both declared an interest in Canal+ Technologies, so they both could be prepared to snap up some of the weaker players, although NDS does not have a history of making numerous acquisitions. — Mark Holmes