Orbital Sciences

Orbital Sciences Corp. posted first quarter revenues of $228.2 million, up 19 percent from revenues of $192.2 million in the same period a year ago, the company announced April 19. Earnings improved from $8.8 million in the 2006 first quarter to $11.5 million in the first three months of 2007.

Orbital credited the revenue increase to a 21 percent gain in the in satellites and space systems segment revenues. The segment posted revenue of $130.6 million in the 2007 first quarter, up from $107.5 million in the 2006 first quarter, driven mainly by work on NASA’s Orion program as well as growth in communications satellites. Launch vehicles segment revenues increased 12 percent to $88.2 million due to higher revenues from target vehicles along with expanded activity in the interceptor and space launch vehicle product lines.

Orbital reported operating income of $17.5 million in the first quarter of 2007, up 10 percent over the first quarter of 2006. This growth was primarily due to a 38 percent increase in satellites and space systems segment operating income to $8.9 million that was mainly attributable to Orion. Operating income in the launch vehicles segment slipped from $9.1 million a year ago to $7.9 million in the most recent quarter primarily due to a decline in Pegasus revenues and profitability, which more than offset profit growth from other programs.

"Orbital began 2007 with solid financial results in the first quarter, posting strong revenue growth in each of our three reporting segments," David Thompson, the company’s chairman and CEO, said in a statement. "The ramp-up of contract activity on NASA’s Orion human spacecraft program and expansion of commercial satellite manufacturing work led the growth in the quarter. With exceptional new order volume during the quarter, which was highlighted by three firm commercial satellite awards, we continue to be very optimistic about Orbital’s outlook for 2007."

During the first quarter of 2007, Orbital received approximately $160 million in new firm contract bookings and $370 million in new options. The company also received about $170 million of option exercises under existing contracts. As of March 31, Orbital’s firm contract backlog was about $1.9 billion and total backlog was about $3.7 billion.

Orbital raised its outlook for 2007 revenues to between $900 million and $925 million, up from previous estimates of $880 million to $925 million.

Sirius-XM

The Competitive Enterprise Institute (CEI) is the latest organization to come out in support of the proposed merger of Sirius Satellite Radio and XM Satellite Radio.

In an April 17 statement, the non-profit, non-partisan public policy group urged federal regulators to approve the union of the two companies and proceed with steps to modernize antitrust rules for all industries

"While some critics have charged that a merged XM-Sirius would ‘dominate’ the market for satellite radio, they ignore the fact that both companies are actually relatively small players in a much larger market of news and entertainment that includes broadcast networks, commercial radio, cable television, the Internet and more," the Institute said. "The approximately $13 billion in market capitalization of both companies pales in comparison to $57 billion value of one major cable company alone."

CEI noted that many of the groups fighting the merger are simply competitors looking to weaken the satellite radio sector. "Given the intense battle going on between XM and Sirius, not allowing them to merge would most likely result in either one or both continuing to lose money and being absorbed by their rival entertainment companies — a good deal for their competitors but not necessarily for their customers or investors," CEI said.

Digital+

Digital+, Sogecable’s Spanish direct-to-home platform, ended the first quarter of 2007 with nearly 2.1 million subscribers, adding 21,000 net new subscribers in the quarter that closed March 31, the company announced. In the past 12 months, the operator has added about 80,000 subscribers in Spain.

Digital+ had an average revenue per user figure of 47.90 euros ($64.90) in the quarter. The average subscription amounted to 40.10 euros ($54.33), and pay-per-view revenues were 7.80 euros ($10.57).

Daniel Kerven, a media equity analyst at UBS, said in a research note that churn was slightly better than expected at 10.9 percent and lower pay-per-view revenues were offset by price increases.

Premiere, Arena

Premiere is suspending the marketing of a deal that allows Premiere to distribute via satellite all of Arena’s pay-TV sports channels and programming while Germany’s Federal Cartel Office (FCO) investigates the agreement, Premiere announced. Unity Media, which owns Arena, will continue to market Premiere and Arena on its cable networks, and Premiere satellite homes with an existing arena Bundesliga subscription will not be affected by this suspension.

According to analysts, the FCO is concerned that the agreement does not provide enough protection for consumers against massive price increases on the package.

Sarah Simon, a media equity analyst with Morgan Stanley, labeled the suspension a surprising development. "The general expectation had been that the deal would be passed without too much difficulty," she said. "This was because the cable sublicensing deal signed between Premiere and Unity Media last July had seen no objection from the FCO."

Daniel Kerven, a media equity analyst at UBS Warburg still expects the deal to be approved. "We would ascribe a high probability to the deal being approved with modifications," he said in a research note. "It is in the interests of Unity, Premiere and the Bundesliga to reach an agreement and Germany would be the only market in Europe with competing satellite platforms if deal is blocked."

Simon does not think the deal will be blocked outright. "We feel that the most likely outcome is that the FCO allows the deal through but in a modified form," she said. "In terms of a timeline for a decision, Unity Media has said that the marketing suspension will apply until the end of May so we would hope to have some indication by then. This is not a certainty though."

–Mark Holmes