BSY.L

U.K. direct-to-home satellite television operator BSkyB announced Oct. 21 an agreement to acquire ADSL service provider Easynet for 211 million pounds ($373.6 million), a move in which at least one analyst sees a variety of positives.

Conor O’Shea, analyst with Teather and Greenwood Ltd., said in an Oct. 21 research comment that as BSkyB “continues to grow its subscriber base, it finds itself increasingly pitching to lighter TV users, who would be more easily swayed by an economic TV-broadband-telephone triple play offer than a comprehensive and expensive satellite TV offering,” something this acquisition would open up. “The move also positions Sky well to defend BT’s expected entry into the TV over aDSL market in 2006.”

O’Shea did identify a risk: “The negative impact it might have in terms of causing satellite customers to switch over and pursue lighter TV offerings, but the extent to which this occurs should be limited, given that this is already an option available to them on cable.”

The announcement did not generate an immediate buzz with investors. BSkyB’s stock, which is traded on the London Stock Exchange, was down to 5.155 pounds ($9.12) Oct. 21 from the previous day’s close of 5.19 pounds ($9.19). However, rumors of the deal began circulating Oct. 16, and BSkyB shares jumped a half-pence Oct. 17 to 5.36 pounds ($9.50) and then dropped in successive trading days up to the official announcement of the deal.

Eutelsat

The stock has not begun trading yet and already the IPO is attracting attention. Typically, analyst coverage of a stock does not begin until after a stock commences trading, but the first report on Eutelsat hit the streets Oct. 18, about a week before the stock is to begin trading on the Euronext Paris exchange. And that report did not paint a glowing picture.

UBS said in that report that the IPO, at the range of 15.25 euros to 17.55 euros ($18.22 to $21.21) is overpriced and suggested the fair value of the IPO offering should be about 14.80 euros ($17.69). UBS analyst Alexandre Dergatcheff argued that if the IPO goes off within Eutelsat’s desired range, it would be trading at a 24-percent premium compared to SES Global and, according to UBS, “Eutelsat does not deserve a premium to SES Global.”

Dergatcheff notes that while Eutelsat “appears to be a sound business, we believe SES Global offers better growth prospects; greater exposure to the rise of high definition TV; higher returns on capital employed; stronger visibility; and a more attractive valuation.”

Eutelsat declined to comment on the UBS report. However, not all observers were ready to cut down Eutelsat’s IPO. A source familiar with the offering told Satellite News that UBS failed to acknowledge a few points.

“First is SES is a very limited float, which depresses its value,” the source said. “If Eutelsat wants to do the offering it is going to do, it is going to have a better float. Two would be difference in management. Eutelsat is run by some very aggressive private equity firms that want to maximize shareholder value. The SES Global management team is under nowhere near the kind of pressure to perform that the Eutelsat management team is. The other reason is that is Eutelsat will have some kind of takeover premium in it. They are, to some extent, a takeover candidate, where SES is not.”

Whether investors will react to the UBS research note or just take it with a grain of salt remains to be seen.

XMSR

The Houston Astros may blame John Smoltz, the losing pitcher in the 2005 Major League Baseball All-Star Game, for them not having home field advantage in the 2005 World Series. Now Astros fans can blame him as well if they miss out on the opportunity for a free XM Satellite Radio.

XM Satellite Radio, which credits its exclusive coverage of Major League Baseball among the reasons for its soaring subscriber numbers this year, launched a “thank you” promotion that offers attendees to Game One of the World Series Oct. 22 at U.S. Cellular Field, home to the Chicago White Sox, a coupon for a free Delphi XM RoadyXT, assuming the claimant signs up for a minimum of three months of service.

What makes this promotion odd is that Houston fans will get the same promotion only if the best-of-seven series goes at least five games. If either team sweeps, Houston fans get shut out. XM spokesman David Butler said the decision to offer the free radio at a point in the series that, for the moment, is not guaranteed to Houston fans, “adds to the drama” of the baseball’s fall classic.

Of course, the question one has to ask is how does this add to the drama? Given the choice, Houston fans are rooting for a four-game sweep of Chicago rather than one loss to ensure those with tickets for Game Five at Houston’s Minute Maid Park get the same gift game one attendees in Chicago receive. It seems to us if XM were real serious about this promotion, it would offer those attending Game Three, the first World Series game in Houston, the same offer. Then again, maybe XM’s crystal ball revealed that one of the teams is in line for a series sweep, limiting the company’s exposure.

XM shares dropped 52 cents to $30.42 the day the promotion was announced, though we do not think the absurdity of this promotion is the cause.

SIRI

Sirius Satellite Radio captured 56 percent of satellite radio retail sales in September, the highest share in the company’s history, Sirius announced Oct. 19. More than 82,000 Sirius radios were sold during the month, a 93-percent increase over September 2004 and a 52-percent increase over August sales, the company said. The retail market share data is based on figures released by The NPD Group, which provides retail and consumer research data.

XM’s David Butler noted that NPD research is not necessarily an accurate identifier of retail sales market share, as it does not capture all retailers, such as Walmart, which Butler said is a key seller of XM receivers.

Sirius received an incremental bump in its stock price, jumping 11 cents to $6.08 Oct. 19, the day Sirius made the announcement, but lost that amount on the next trading day.

ORB

Orbital Sciences Corp. earned $6.8 million in the third quarter 2005, down from a profit of $11.4 million in the third quarter 2004, the company announced Oct. 20. Revenue fell from $171.7 million to $159.3 million in the same times period.

Orbital attributed the revenue decline to softness in the satellites and related space systems segment. Revenues in the segment slipped from $86.5 million in the third quarter 2004 to $74.8 million in 2005 due to lower activity in certain government programs that should be completed before the end of 2005. The decline was partially offset by higher communications satellites product line revenues.

Launch vehicles segment revenue was $79.8 million in the third quarter of 2005, which ended Sept. 30, compared with revenue of $80.2 million in the same quarter in 2004. The decline was due to decreases in the space launch vehicles and target launch vehicles product lines, which was offset by revenue growth in the interceptor launch vehicles product line.

Orbital shares took a hit Oct. 20, dropping 83 cents to $11.18 and killing a string of six consecutive trading-day gains dating back to Oct. 12, when the stock closed at $11.52.