The struggling satellite industry still managed revenue growth of 10 percent last year, despite clear indications of reduced demand for new satellite orders, according to a survey recently released by the Bethesda, Md.-based consulting firm Futron Corp.

The study, commissioned by the Satellite Industry Association, found that industry-wide revenues rose to $86.8 billion last year, compared with $78.6 billion for the year before. Respondents to the survey painted an overall picture of modest growth in the four industry segments measured — satellite services, manufacturing, launches and ground equipment.

Part of the reason there was improvement in 2002 was the sector weakness in 2001, especially for launches. One constant growth driver for the industry continues to be satellite services, which made up 57 percent of the industry’s total revenues in 2002, compared with 42 percent in 1996, Futron found.

Overall revenue from satellite services grew 7 percent in 2002 to total $49.8 billion, compared with a 19 percent jump in 2001 when revenue topped out at $46.5 billion, according to Futron. Within the satellite services sector, subscription/retail services boosted revenues to $42.5 billion, up from $39.2 billion during the previous year. Transponder leasing held steady at $7.3 billion in 2002.

Subscription TV services are responsible for the bulk of the rise, but U.S. satellite radio is making strides, the survey found. However, satellite radio companies still only account for 1 percent of the overall satellite services revenue.

Launch sector revenues rose 23 percent to $3.7 billion during 2002, despite decreased pricing per launch. That overall rise hid a 9 percent drop in U.S. launch revenues caused by price cuts and by a reduced number of launches.

Despite reports from Space Systems/Loral and other U.S. satellite manufacturers of waning demand, satellite manufacturing worldwide grew revenues by 27 percent last year to $12.1 billion, according to the survey. Growth in the global satellite-manufacturing sector largely stemmed from two satellites that cost $1 billion each, Milstar 5 and Envisat, Futron officials noted.

Increased manufacturing revenues reflected the large number of contracts awarded in 2000 and 2001, according to Futron’s analysts. A “significant decline” in orders during 2002 will be reflected in revenue figures during the next 18-24 months.

Ground equipment revenues climbed to $21.2 billion in 2002, an 8 percent increase over $19.6 billion in 2001. That pace is off the sector’s average growth rate of 14 percent during the past six years, Futron officials said.

The greatest revenue growth in the ground equipment arena occurred in the end-user equipment used for very small aperture terminal (VSAT), satellite TV, high-speed Internet and satellite radio services, according to the survey.

The good news is that the global satellite industry’s revenues grew in 2002 despite a general downturn in the telecommunications sector and a weak global economy. Other bright spots included a rise in government spending and strong consumer demand, the survey reported.

Negative factors include declines in profit margins, stock prices and new satellite orders. In addition, the U.S. satellite industry’s market share has dipped due to increased competitiveness from foreign suppliers and the perception of impediments caused by U.S. export control policies, Futron found.

–Paul Dykewicz

(Richard DalBello, Satellite Industry Association, 703/739-8357; Phil McAlister, Futron, 301/347-3423)