Intelsat completes merger with PanAmSat

July 7, 2006

Intelsat has completed its $6.4 billion purchase of PanAmSat, creating a company that will now carry about 25 percent of the world's commercial satellite-delivered television programming. The combined company has a fleet of 51 satellites, eight teleports, a network of 40,000 miles of fiber and can reach 99 percent of the world's populated areas with a variety of communications services.

The acquisition leaves PanAmSat a wholly owned subsidiary of Intelsat. The combined company will lose money, the Washington Post reported. PanAmSat earned $72.7 million last year, but Intelsat lost far more, about $325 million. Already deep in debt, Intelsat is borrowing heavily to finance the purchase.

Intelsat chief executive David McGlade told the newspaper that given the level of debt and interest payments, the company does not expect to become profitable in the foreseeable future. He said the company's investors have been pleased with Intelsat's positive cash flow and its heavy backlog of orders.

The traditional core of Intelsat's business has been telecommunications, a difficult market in recent years. The combined company will be more diverse with the addition of PanAmSat media and entertainment customers such as the BBC, News Corp., Time Warner and the Walt Disney. PanAmSat also gives Intelsat expanded reach worldwide.

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