Title: Satellite Industry: Financing and Entrepreneurship in the Aftermath of Sept. 11
1Satellite Industry Financing and
Entrepreneurshipin the Aftermath of Sept. 11
- November 28, 2001
- John F. Dealy
- The Dealy Strategy Group LLC
2Satellite Company Stock Price Changes Since
September 11, 2001
3Despite Uncertain Economic Times, Some Favorable
Market Results
- DirecTV Added 425,000 Net New Subscribers in
3Q2001 -- Bear Stearns Had Predicted 235K and
Merrill Lynch Projected 100K Net Adds -- DirecTV
had 10.3M DTH Subscribers as of 9/30/01 - EchoStar Attracted 360,000 Net New Subscribers in
3Q2001, Resulting in 6.43M Total Subscribers as
of 9/30/01 (a 35 Increase Over 9/30/00) -- Bear
Stearns Had Projected 380K and Merrill Lynch
Estimated 350K Net Adds - Globalstar Experienced a 14 Increase in
Subscribers to 58,600 and 37 Increase in
Minutes of Use to 7.4M in 3Q2001 Ending
9/30/01 Compared to 2Q2001
4New/Revived Business Opportunities
- Tragedies of Sept. 11 Increased the Demand for
Some Ongoing Initiatives and Created New
Opportunities in the Satellite Field - Unique Capabilities of Satellites to Provide
Ubiquitous Mobile Telephony Services (Not Reliant
on Terrestrial Infrastructure) (i.e., Iridium
Globalstar) and to Broadcast News/Information to
Mobile Users (i.e., XM Radio) Attract Increased
Demand for Services - Satellites Ability to Provide Real-time
Surveillance, Remote Sensing, and Two-way
Communications from Airliners will Receive
Greater Attention -- Including Government Funding
and Entrepreneurial Focus
5Adapting to the Situation
- Examine Current (and Planned) Business Strategy
to Meet These Emerging Needs - Ubiquitous Mobile Access to News/Information
(Local/National/International) -- Keeping People
Up-to-Date on Breaking News - Ubiquitous Mobile Communication -- Keeping People
in Touch with Each Other - Tracking, Sensing/Imagery, and Other Security
Measures -- Improving Actual and Perceived
Security -- Particularly of Travelers
6Difficult Capital Markets
- Technology Companies Inability to Access Readily
the Public Capital Markets (e.g., IPOs, Secondary
Offerings -- Due to Depressed Stock Prices) Means
They Must Be More Creative in Conserving Funds
and Accessing Private Capital - Strategies Include Accounts Payable Deferrals/New
Business Commitments, Attaching Warrants to
Private Debt Financings, Postponing and
Re-phasing Service Roll-outs - Undervalued Stock an Asset -- If Properly
Deployed and Leveraged
7Recent Financing Deals
- Planned EchoStar/Hughes Merger -- Brings
Economies of Scale to DTH Market, but Confuses
Outlook for Planned Two-way Internet Access
Providers -- i.e., Spaceway, WildBlue, Starband
- XM Boeing Funding (66M) -- Demonstrates Role
of Strategic Vendors in Providing Capital Support - WSNet (Multiple Dwelling Satellite TV) Funding
(30M) -- from Existing Shareholder Confirms
Importance of Demonstrated Market Demand -- e.g.,
750K Subscribers - Shiron Satellite Communications (User Terminals)
-- Bridge Loan (30M) from Existing Shareholders
-- Followed Abandonment of a Series C Equity
Offering
8Restructurings
- In and Out of Chapter 11
- Repricing of Announced Deals
9Bottom Line
- Money Available -- Takes Ingenuity and Realistic
Pricing to Obtain -- Look At Home First - Markets have Rebounded To Date -- But Need
Satellite Success Stories to Attract Public/High
Yield Capital to the Sector - Venture Capital Still There -- Looking for
Smaller Sized Projects, Shorter Time to Revenue
Generation, and Solid Product/Service Niches --
Willing to Trade Higher Potential Returns for
Lower Risk
10 John F. Dealy, President The Dealy Strategy
Group LLC 2300 N Street, NW Washington, DC
20037 phone 202.454.7410 fax 202.454.7417 john.de
aly_at_dealystrategy.com www.dealystrategy.com