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Sat-na
June, 16
1997
The New PrimeStar
Murdoch to buy International Family Entertainment
Hughes to build new satellite for Sweden
Commerce Committee: Proposed legislation
OrbView-2 Satellite Arrives at Vandenberg
Cricket Anyone!
Goal!
Microsoft invests $1 billion in Comcast
HBCO Distribution Contract
The New PrimeStar
PRIMESTAR signed a binding letter for the restructuring
of PRIMESTAR Partners L.P. Simultaneously, PRIMESTAR
Partners, L.P. has entered into an agreement to combine the
assets of PRIMESTAR, Inc. with ASkyB.
According to terms of the agreements, each partner
company involved in PRIMESTAR, including TSAT, Time Warner
Satellite Services, Newhouse, Cox, Comcast, MediaOne
(formerly Continental) and GE Americom, will contribute
their PRIMESTAR customers and partnership interests into the
newly formed, public entity of PRIMESTAR, Inc.
Additionally, ASkyB will contribute its two satellites
currently under construction as well as the license to
operate at the 110 degree West Longitude orbital location
using 28 transponder channels.
Primestar and Tempo Satellite have agreed to dispose of
their rights in the license to operate 11 transponder
channels at the 119 West Longitude orbital slot.
Concurrently, ASkyB has agreed to sell its Gilbert,
Arizona satellite uplink facility to Tele-Communications,
Inc. for a purchase price which represents ASkyB's
investment in the facility, plus related interest expense.
Current TSAT shareholders will retain approximately 37
percent ownership of PRIMESTAR, Inc., with Time Warner
Satellite Services/Newhouse (approximately 30 percent),
Comcast (approximately 10 percent), MediaOne (approximately
10 percent), Cox (approximately 9 percent), and GE Americom
(approximately 4 percent) rounding out the ownership group.
ASkyB, in return for its contribution of assets, will
receive non-voting convertible securities with a total
liquidation value of approximately $1.1 billion; comprised
of approximately $600 million liquidation value of non-
voting convertible preferred stock (convertible into
approximately 52 million shares of non- voting common,
subject to adjustment) and approximately $500 million of
convertible subordinated notes (convertible into
approximately 43 million shares of non-voting common,
subject to adjustments).
Existing TSAT shareholders will exchange their current
TSAT shares for shares of the new PRIMESTAR, Inc. on a one-
to-one basis. For other contributing partners,
approximately 132 million new shares of stock are expected
be issued to meet the terms of the agreement, combined with
approximately 67 million TSAT shares currently outstanding
(76 million on a fully diluted basis). Each contributing
partner will receive a combination of equity ownership of
PRIMESTAR, Inc. and cash, with TSAT shareholders receiving
equity in PRIMESTAR, Inc., all subject to closing
adjustments.
The board of directors of the newly-structured
PRIMESTAR, Inc. will consist of eleven representatives;
three chosen by TSAT's series B shareholders, three chosen
by Time Warner Satellite Services, one each chosen by Cox,
Comcast, and MediaOne and two independent members.
Jim Gray, PRIMESTAR Partners' current Chairman and CE0
will be appointed Chairman and CE0 of PRIMESTAR, Inc. until
the transition to the new company has been completed. An
executive search will commence immediately for a new CEO to
lead the venture. Dan O'Brien, current President of Time
Warner Satellite Services, has been named to the position of
President and COO of PRIMESTAR, Inc.
John Goddard, formerly CEO of Viacom Cable and
currently serving on TSAT's board of directors, will lead a
transition committee including Mr. Howard, Mr. Gray and Mr.
O'Brien, which has been charged with determining the final
management structure for PRIMESTAR, Inc., as well as the
location of the business offices.
Completion of the agreement is contingent on approval
by TSAT shareholders and all necessary government and
regulatory approvals.
Ownership of Common Voting
Shares Outstanding Power
Current TSAT 37% 38%
Stockholders
Time Warner/ Newhouse 30% 30%
MediaOne (U S WEST 10% 10%
Media Group)
Cox 9% 10%
Comcast 10% 10%
GE (GE American 4% 2%
Communications)
100% 100%
The combining of ASkyB and PrimeStar is not however
without pitfalls. Regulators, mainly the FCC, will look at
the deal to see its impact on competition in cable and
satellite television.
Here's the areas the FCC will be interested in:
" channel capacity for satellites used to beam TV
programs around the nation.
" competition between providers of cable TV, high-powered
DBS TV, and DTH satellite TV that must use larger dishes
than DBS.
" DBS providers' access to programs
" the three orbital satellite slots now capable of
beaming programs nationwide.
" Tele-Communications which shares one of the other two
slots with EchoStar.
Charlie Ergen EchoStar's Chairman and CEO responded.
Below is his statement:
Consumers across the country would object in mass if
they understood Primestar Inc., a proposed comprehensive
combination of the five largest cable companies in the
world, including the largest content providers in the United
States, with perhaps the most powerful media mogul.
It clearly is not in the public interest to give the
single piece of real estate in space which is most capable
of fostering effective competition to cable, to a cable and
content cartel of unprecedented size and proportion.
This proposal, if permitted, would clearly result in
even higher cable television rates and the consumer will
continue to be held hostage to the powerful cable interests.
This alliance will violate the spirit of the 1996
Telecommunications Act and the best intentions of President
Clinton and Congress in passing what was intended to be
comprehensive pro-competitive legislation.
The stark contrast with Rupert Murdoch's recent promise
to Congress that he would: "offer consumers a full-fledged,
satellite-delivered alternative to cable" is disturbing, and
raises serious questions.
This transaction is obviously anti-competitive and anti-
consumer. We are confident that the Federal Communications
Commission, the Department of Justice, and the Federal Trade
Commission, together with other federal and state regulators
charged with protecting consumers, will reject this proposed
alliance.
We trust that our leaders in Washington will not allow
the "Big Cable Operator in the Sky" to deprive American
consumers of a competitive choice.
EchoStar Communications Corporation intends to
vigorously oppose this anti-competitive combination on many
levels. EchoStar notes that in its pending litigation with
News Corporation Ltd. in U.S. Federal Court in Denver, it
has demanded damages and specific performance from News
Corp. which prohibits News Corp. from completing the
transaction with Primestar Inc. EchoStar is contractually
entitled to use the 28 DBS frequencies at 110 degrees W.L.
which News Corp. proposes to contribute to Primestar, Inc.
Regarding the litigation News Corporation released the
following:
News Corporation has filed its answer and counterclaims
in the breach of contract action brought against it by
EchoStar Communications Corporation in the Federal District
Court in Denver, Colorado.
News Corp.'s answer denies all of the material
allegations in the Complaint and asserts twenty defences,
including bad faith, misconduct and failure to disclose
material information on the part of EchoStar and its
Chairman and Chief Executive Officer, Charles W. Ergen.
The counterclaims, in which News Corp. is joined by its
subsidiary American Sky Broadcasting, L.L.C., assert that
EchoStar and Ergen breached their agreements with News
Corp., and failed to act and negotiate with News Corp. in
good faith.
Additionally, the counterclaims allege that Ergen
personally acted wrongfully and caused EchoStar to act
wrongfully to advance his own self-interests in retaining
control over EchoStar and gaining control over the DBS
business of News Corp. and ASkyB - all contrary to the best
interests of EchoStar, News Corp. and ASkyB and their
shareholders.
Murdoch to buy International Family Entertainment
Overshadowed by the ASkyB/PrimeStar deal is the other
merger news this week.
A subsidiary of Fox Kids Worldwide will merge with and
into IFE, with IFE as the surviving corporation, in a
transaction valued at approximately $1.9 billion, including
outstanding debt. Holders of IFE Common Stock will receive
$35 per share in cash.
Pat Robertson, IFE's Chairman, Tim Robertson, IFE's
President and Chief Executive Officer, and trusts controlled
by them have agreed to sell all shares of IFE's Class A
Common Stock (in the form of Class B Common Stock into which
such shares are convertible) and Class B Common Stock held
by them, and each of The Christian Broadcasting Network,
Inc. and Regent University have agreed to sell all their
shares of Class B Common Stock, to FKW for $35 per share in
cash, pursuant to separate Stock Purchase Agreements, and
each of such stockholders has executed a consent approving
the merger.
Liberty IFE, Inc.which holds non-voting Class C Common
Stock of IFE and $23 million of 6% Convertible Secured Notes
due 2004, convertible into Class C Common Stock, has agreed
to contribute its Class C Common Stock and Convertible Notes
to FKW, in a transaction intended to be a tax-free exchange,
in exchange for a new series of nonconvertible 8.5%
preferred stock of FKW. The FKW preferred stock will have a
liquidation preference equivalent to $35 per Class C share,
plus an amount designed to compensate Liberty for foregoing
interest on the Convertible Notes and for certain tax
consequences.
It is anticipated that Pat Robertson will be Co-
Chairman of IFE and Tim Robertson will continue as President
and Chief Executive Officer. Corporate headquarters will
remain in Virginia Beach, Virginia.
Standard & Poor's has placed its triple-`B' corporate
credit rating and triple-`B'-minus-r preference stock rating
on News Corporation Ltd., and its ratings on the company's
units on CreditWatch with negative implications.
According to S&P, the IFE merger is a good strategic
fit with News Corp.'s Fox Kids programming. However, the
price represents an extremely high multiple and, largely due
to debt financing expected at the venture level, the venture
will be unable to generate net cash flow to its partners.
Even prior to the IFE deal, News Corp. had little debt
capacity remaining at the triple-`B' corporate credit rating
level. For the trailing 12 months ended Mar. 31, 1997,
Australian accounting earnings before interest, taxes,
depreciation, and amortisation (EBITDA) coverage of interest
was 2.9 times and coverage of interest plus debtlike
preferred dividends was 2.8 times, pro forma for the
acquisitions of New World Communications Group Inc. and
Heritage Media Corp. On a U.S. accounting basis, June 30,
1996 EBITDA coverage of interest was 2.68 times and coverage
of interest plus debt-like preferred dividends was 2.55
times.
Standard & Poor's expects that cash balances will be
used, in part, to fund new business investments including
the Fox News Channel and the company's global DTH interests,
which in aggregate are likely to continue requiring funding
support over at least the next one to two years.
Hughes to build new satellite for Sweden
Hughes has been awarded a contract for Sirius 3.
The satellite will be an HS 376 high-power model
satellite and will provide direct-to-home television
services to the Scandinavian region. Hughes will also
upgrade NSAB's satellite-control centre at Esrange, Kiruna,
and will provide training to the satellite controllers.
The current NSAB constellation includes Sirius 1, also
an HS 376 model, which was built for British Satellite
Broadcasting and sold to NSAB in-orbit in 1993, and Sirius
2, which is being built by another manufacturer and will be
launched later this year. Sirius 3 will replace Sirius 1
and will be located at 5 degrees east longitude.
Sirius 3 will have 15 Ku-band transponders and will use
gallium arsenide solar cells to generate 1400 watts of
spacecraft power. Hughes will deliver the satellite on-
ground to NSAB in July 1998. Planned service life is 12
years, assuming an Ariane launch. NSAB will make launch-
vehicle arrangements separately.
Commerce Committee: Proposed legislation
Rep. Bliley, chairman of the U.S. House Commerce
Committee, introduced this week a bill, the "Communications
Satellite Competition and Privatization Act of 1997," which
would amend the Communications Satellite Act of 1962 to
promote competition and Privatization in satellite
communications. The bill sets parameters and timetables for
the Privatization of Intelsat and for changes to the
regulation of Comsat Corporation, the U.S. signatory to
Intelsat. Rep. Edward Markey (D-MA), the ranking Democrat
on the House Commerce telecommunications subcommittee, co-
sponsored the bill.
Among the bill's features are setting a deadline for
Intelsat's Privatization and prohibiting Intelsat from
registering additional orbital slots or expanding into new
services during the transition. It would also strip Comsat
and any future privatised Intelsat entity of their treaty-
related privileges and immunities. Also, the bill would
prohibit Intelsat and its future privatised affiliate from
providing anything but core services in the United States if
they failed to meet the bill's new requirements.
OrbView-2 Satellite Arrives at Vandenberg
The OrbView-2 commercial imaging satellite
has arrived at the Vandenberg Air Force Base, California
launch site where it is being integrated with the Pegasus XL
rocket that will launch it into low- Earth orbit in July.
Once in orbit, OrbView-2 will be the world's first privately
owned satellite to provide multi-spectral images of the
Earth's ocean and land surfaces that will be used by
commercial customers and scientific researchers.
ORBIMAGE will collect and process colour images of the
Earth's oceans to produce fish finding maps that commercial
fishing fleets will use to reduce search time, lower
operating expenses and increase profitability.
Cricket Anyone!
USSB will televise two of the world's best one-day
international cricket teams as they do battle in June. The
series includes two test matches and a one-day international
match between the World Cup One-Day International Champions,
Sri Lanka and the West Indies.
The first broadcast is scheduled to begin on June 15,
with a highlight program featuring coverage from the one-day
international match on June 6. The second program,
broadcast on June 22, will include coverage from the test
matches from June 13-17. The final program, broadcast on
June 29, will include coverage from the second test matches
on June 20-24. Each program will begin at 5:00 p.m. EDT.
The broadcasts will be on channel 905.
Goal!
Looking for soccer matches this summer! PanAmSat
expects to transmit more than 2,000 hours in 1997 of the
world's premier soccer matches for leading international
programmers, including ESPN, Fox Sports Americas, Italy's
Radio Televisione Italiana (RAI) and virtually every major
broadcaster in Latin America. Among the transmissions will
be coverage of several qualifying matches for the 1998 World
Cup finals in France.
Some of the 1997 soccer matches and tournaments carried
via PanAmSat satellites include:
" The Copa America soccer tournament transmitted from
Bolivia by a range of broadcasters including Canal 4 El
Salvador, Canal 5 Honduras, Canal 13 Panama, Canal 13
Paraguay, Canal 4 Peru, Caracol TV Colombia, Channel 5
Haiti, Fox Sports Americas, Gamavision Ecuador, Televisa
Mexico, Torneos Network Argentina, TV Bandeirantes, TV Globo
and others throughout the Caribbean basin. The tournament
will take place June 11 through June 29 and involves the top
teams from Latin America.
" Tournaments played in France (June), Malaysia
(June/July), Egypt (September) and Saudi Arabia (December)
for broadcasters including Organizacion de la Televisione
Ibero-America (OTI), Telemundo, TV Azteca and TV Globo.
" World Cup qualifying matches in the Americas and Europe
and involving teams from Argentina, Bolivia, Canada,
Colombia, Croatia, Ecuador, El Salvador, Holland, Italy,
Jamaica, Mexico, Poland, Slovenia, Turkey and the United
States. Broadcasters receiving transmissions include Canal
13 Chile, the United Kingdom's CSI, ESPN, Gamavision
Ecuador, OTI, Telefe, Televisa, Torneos Network and TVN
Chile. The games run through November.
" Italian, Spanish, English, German and Union of European
Football Associations league matches for ESPN, Fox Sports
Americas, OTI and RAI throughout the year.
Microsoft invests $1 billion in Comcast
Microsoft will make an investment of $1 billion in
Comcast, the fourth-largest cable television operator in the
US. The $1 billion cash investment will enhance Comcast's
deployment of high-speed data and video services via its
cable delivery network.
Microsoft will purchase 24,642,681 shares of Class A
Special Common Stock for $500 million at $20.29 per share
and $500 million of a new issue of Comcast Series B
Convertible Preferred Stock. The Comcast Series B
Convertible Preferred Stock will have a 5.25 percent pay-in-
kind dividend and will be initially convertible into
21,243,691 shares, which equals an initial conversion price
of $23.54 per share. The number of shares into which the
issue can be converted will not increase due to the pay-in-
kind dividend as the conversion price increases
proportionately to the amount of accrued dividends. The
issue will have a final maturity of 20 years, but may be
redeemed at Microsoft's option or called by Comcast after
seven years. The investment is expected to close this month.
HBCO Distribution Contract
Hungarian Broadcasting Corp. has signed a satellite
distribution contract with Antenna Hungaria using space on
the Amos satellite. Service is expected to begin June 26,
1997. Antenna Hungaria will provide satellite-to-cable
transmission services for HBCO's Hungarian broadcasting
station, MSAT, to cable operators in Hungary. This
distribution is in addition to the AM Micro transmission in
Budapest. HBCO will cease transmitting MSAT's signal on the
Astra satellite effective June 30.
Russian/American Venture to Replace Gorizonts
The Russian Satellite Communications Company has signed
joint agreements with U.S. Russian Telecommunication and
Hughes leading to the replacement of three ageing
Gorizont satellites operating in the 53 degree East, 90
degree East, and 103 degree East orbital slots.
RSCC will make available the orbital slots and launch
services beginning in 1998 with the replacement of Gorizont
32 (53 degE). It is anticipated that each of the new
satellites will offer 42 to 48 transponders both in C-band
and Ku-band frequency and that all three satellites will be
on orbit and operational by 2001.
Upcoming Launches
Next Ariane Launch Next Atlas/Delta Launch
Intelsat 802 --June 25, 1997 Superbird C -- July 22, 1997
Flight 96
Satellite Intelsat 802
Manufacturer Lockheed
Martin
Type 7000
Mass at Lift- 3,420
Off
Stabilisation 3-axis
Payload 36 C Band
6 Ku Band
Design Life 15 years
Coverage Asia Pacific
Orbital 174 East
Position
In Brief
" Cox Communications Inc. will include Bloomberg
Television in its digital service offerings, which are
scheduled to be launched later this year.
" Non-stop cartoons are coming to Japan as Turner
Broadcasting System Inc., Time Warner Inc. and Itochu Corp.
launch a Japanese version of the Cartoon Network. The new
network will launch on September 1 and be available to cable
viewers and on the PerfecTV digital satellite broadcasting
service.
" Channel One Network has renewed its subscription to
WTN's satellite news services through the turn of the
century. Under the agreement, Channel One Network receives
WTN Daily Satellite News Service which includes video of
breaking international news events, entertainment and sports
news from across the globe.
" Home Box Office plans to begin offering digital high-
definition television programming by next summer. HBO's is
one of the first cable companies to adopt HDTV.
" ICO Global Communications announced supply contracts
with leading mobile telephone manufacturers Mitsubishi and
NEC to develop and manufacture mobile phones with an
integrated satellite aerial.
" Starting in August, BBC World and BBC Prime will be
transmitted from one EUTELSAT transponder at the 13 degrees
Hot Bird position.
" ICO Global Communications has purchased a new building
in the greater London area to install its Satellite Control
Centre and Back-up Network Management Centre. The building
will be completed in time for the launch of ICO's first
satellite. The London Satellite Control Centre will perform
all management and control functions of the eventual
constellation of 10 operational satellites.
" China successfully launched Fengyun 2, is a second-
generation meteorological satellite developed by Chinese
scientists. It was launched by a Long March 3 carrier rocket
at the Xichang Satellite Launching Centre in south-west
China's Sichuan Province.
" General Instrument will co- produce DigiCipher II/MPEG-
2 digital consumer satellite receivers in China for use in
that country
Sat-na is sponsored by TELE-satelit International
http://www.tele-satellit.com
and produced by Satellite Journal International
http://members.aol.com/satjournal
The information contained in Sat-na MAY NOT be republished or redistributed
(c) Sat-na 1997
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