Zero Degrees of Separation

Intelsat-PanAmSat merger creates satellite behemoth
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Intelsat-PanAmSat merger creates satellite behemoth

PEMBROKE, BERMUDA

Last month, Intelsat, Ltd. completed its merger with PanAmSat Holding Corp., creating the largest provider of fixed satellite services worldwide. As a result of the merger, PanAmSat is now a wholly owned subsidiary of Intelsat, and its common stock has been delisted from the New York Stock Exchange.

With the combined assets of the two entities, Intelsat now has 51 satellites, and carries 25 percent of television channels transmitted via satellite, as well as 16 direct-to-home) platforms worldwide-which together reach an audience of more than 6 billion households.

In a video announcing the merger's completion, which can be viewed at www.intelsat.com, Intelsat said that its new mission is themed "Zero Degrees of Separation," meaning it now has the resources to "remove all communications barriers that stand between its customers and the people they serve."

Prior to the merger, PanAmSat had an advanced satellite fleet and blue-chip media customer base; and Intelsat was particularly strong in the government, telecom, and data markets. The new Intelsat serves a customer base that spans telecom, network services, government and media, including ABC, CBS, Warner Bros., Fox, the CW, Tribune station group, CNN and MSNBC.

SEASONED SPECIALISTS

"One of the things that PanAmSat brings to the new Intelsat is the best special events desk and team in the world. And PanAmSat had extensive experience handing mission critical broadcast feeds, such as high-profile sporting and news events globally," said Kurt Riegelman, senior vice president of the Americas for Intelsat in Los Angeles.

While the corporation is based in Pembroke, Bermuda, it has U.S. offices in Washington, D.C., among other locations nationwide. Before assuming his new post with Intelsat, Riegelman was head of sales for PanAmSat.

"As an integrated entity, we have now set up three teams, each of which is focused on one of three markets: broadcast services, cable and emerging media, and network services," Riegelman said. "Our goal is to ensure a cost-efficient, reliable solution that packages whatever satellite and fiber transmission services broadcast customers need to support their operational workflow."

Besides its 51 satellites, Intelsat also owns a large complementary terrestrial infrastructure including eight owned teleports, fiber connectivity, and more than 50 points of presence in almost 40 cities-all of which can be packaged with the satellite services for a complete solution.

With respect to capital expenditures on its satellite fleet going forward, Riegelman said that Intelsat now has "a very healthy replacement program underway," with plans to launch new satellites to replace those that have reached the end of their life. In June 2006, Intelsat launched Galaxy 16, and in 2007, Intelsat has planned five satellite launches for replacement capacity over the Americas, including G17, G18, and IA-9.

"Intelsat and PanAmSat as a combined entity makes it unquestionably the No. 1 satellite company in terms of satellite capacity," said Christopher Baugh, president of NSR (formerly Northern Sky Research), in Cambridge, Mass.

Baugh said that Intelsat's earlier acquisition of the satellite assets of Loral also helped put it in a very solid position in the broadcast sector since Loral's satellites had a fair amount of broadcast traffic on them.

According to Baugh, the satellite industry is shifting to a mediacentric market that includes mobile television, IPTV and other new forms of media.

"If you examine the overall revenues of the satellite industry, between 60 and 70 percent results from video broadcasting. And the trend towards HDTV has the industry poised for further growth."

While HD channels represent new material that can be carried by satellites, Baugh said the overall growth picture is very complex because it involves many variables. Also, he said that steady revenue streams from satellites have attracted an influx of investors and private equity, which has helped make the satellite sector especially lucrative.

However, Baugh said, "I do not see prices for fixed satellite services in North America coming down anytime soon because there is such strong demand for capacity, especially in the broadcast bands, which is very prime satellite real estate."

GOING GLOBAL

GlobeCast WorldTV has been an Intelsat customer for seven years. During this time, GlobeCast World TV has realized substantial growth in its business-providing an international television distribution platform that gives foreign broadcast services a means of reaching audiences in North America.

GlobeCast WorldTV currently leases 10 satellite transponders on Intelsat-Americas 5. But as a result of its rapid growth, GlobeCast WorldTV took on one more transponder on IA-5 starting Aug. 1, bringing its total to 11 transponders.

"Depending on the bandwidth attributed to each video and audio service, we can accommodate 10 or more 24-hour broadcast services per transponder, and at the current time, all of our transponders on IA-5 are full," said Lisa Coelho, vice president of GlobeCast WorldTV, in New York, a subsidiary of GlobeCast, which is owned by France Telecom. "This prompted us to acquire the additional transponder, which will be virtually filled the moment we begin broadcasting over it in August."

While she could not divulge subscriber numbers, Coelho said there are more than 23 million people in the United States who speak other than English or Spanish at home.

GlobeCast WorldTV has found a niche market bringing this audience more than 200 broadcast services in 30 different languages from Asia, the Middle East, Europe, and Africa. GlobeCast WorldTV operates its own direct-to-home platform that provides subscriber homes with a set-top box, smart card, and satellite dish for accessing international programming on IA-5.

After ingesting these broadcast services once, GlobeCast can also make them available to many outlets, including cable headends, other direct-to-home services and terrestrial broadcasters.

"We handle everything from A to Z on behalf of our international broadcasters, including negotiations, marketing, billing, and customer service," Coelho said. "Also, since we're a platform-agnostic content management provider, we are now expanding distribution of these services into many new outlets, including mobile television, IPTV, and hotels."

GlobeCast WorldTV encourages its international broadcasters to migrate from analog to digital signals. Currently, none of the services broadcast in HDTV, but Coelho said some of GlobeCast WorldTV's more sophisticated broadcast customers will likely adopt MPEG-4 in the near future.

Before the merger, parent company GlobeCast partnered with PanAmSat and Scientific-Atlanta to deliver an HDTV satellite platform on the new Galaxy 13 satellite for cable distribution and live event broadcasting. Now part of the new Intelsat, Galaxy 13 is an "HDTV neighborhood" of networks such as Cinemax HD, Fox Sports Channel HD, HBO HD, HDNet, Encore HD, and STARZ HD, as well as a platform for live HD events like sports and concerts, pay-per-view and syndicated shows.

When any content provider bases its services on satellites, there's always a concern that a satellite could fail or be lost. "It's never happened to us, but we do have a disaster recovery plan in place in the case of such an event," Coelho said.

"Intelsat has assured us that they also have contingency plans in place for their fleets," Coehlo said. "Our relationship with Intelsat has been more like a partnership. Over the years, Intelsat has even steered international broadcast customers our way, which has contributed to our growth.