For those of you with internet-stock-performance-envy, here may be just the news to give you a nice warm fuzzy feeling. This could be a huge deal for Loral(especially exposure-wise):
April 03, 1998
TCI in Talks For @Home In The Sky
Tele-Communications Inc. officials are in talks with satellite providers, including Loral Corp., about the potential for delivering a satellite version of the @Home Network high-speed-data service, according to sources close to the talks.
In addition, sources said, Loral and PrimeStar Inc., which is 36 percent-owned by TCI spinoff TCI Satellite Entertainment Inc. (TSAT), have batted around potential deals that would see Loral gain access to PrimeStar's 11 high-power satellite frequencies at 119 degrees west longitude.
PrimeStar has a Loral-built satellite orbiting at 119 degrees now. But that satellite suffered a serious power loss and has not yet been formally accepted by PrimeStar. Loral is eager to shed a potential liability associated with the satellite's problems and wants to tap the high-power capacity, sources said.
PrimeStar, meanwhile, may be forced to shed the frequencies at 119 degrees to win government approval of its pending $1.1 billion deal to buy 28 high-powered frequencies from MCI Communications Corp. and News Corp. at 110 degrees west.
PrimeStar, whose other owners include four major cable operators, does not want to see those frequencies end up owned by EchoStar Communications Corp., a rival satellite service that also operates from 119 degrees.
"So each side needs something - that's the makings of a deal," a source familiar with the talks said. But the source cautioned that the talks have been held on and off for months, and may not be active at this time.
While the status of the PrimeStar-Loral deal is unclear, TCI executives said talks involving various TCI assets and Loral's planned CyberStar data-over-satellite network are active.
A senior executive close to the discussions said TCI and Loral had hoped to break the news of a partnership at Loral CEO Bernard Schwartz's CyberStar press conference at the National Association of Broadcasters Conference in Las Vegas today (April 6). The deal could not be pulled off in time, though, the source said.
Loral spokesman David Benton said last week that the company would not comment on "speculation."
But TCI executives, including chairman and CEO John Malone, openly discussed the potential for a high-speed data alliance with a satellite network at TCI's March 24-26 lenders' and analysts' conference in Denver.
They did not disclose potential partners, but TCI executives later confirmed there have been discussions with Loral as well as with other companies.
At the conference, Malone explained that TCI-controlled United Video Satellite Group invested last fall in KaStar Satellite Communications Corp., a company that controls licenses to offer so-called Ka-band satellite services, because of the potential to extend @Home nationwide. Hypothetically, Malone said, if @Home were to strike a deal with BankAmerica Corp. similar to the bank's agreement with TCI on set-top devices, a satellite platform would allow BankAmerica to reach customers within its territories that aren't served by TCI cable systems. TCI has consolidated UVSG within TCI Ventures Group, which also holds TCI's controlling stake in @Home's parent company, At Home Corp.
Gary Howard, who is CEO of both UVSG and Ventures Group, had said in response to a question about Ka-band plans that UVSG had "stepped back" from backing Ka-band development at KaStar because TCI was approached by another company that had plans of its own.
"We got to talking to someone about that [and] they had a particular idea of which we could play a servicing role and pick our own equity position," Howard said.
Later, Howard said the talks were aimed at combining UVSG and @Home services with the unnamed potential partner.
He said the aim was creating a "better" version of DirecPC, the Hughes Network Systems service that sends high-speed data to home receivers via satellite but requires a telephone line for outgoing data.
If a deal is struck, UVSG would contribute assets, including a service agreement, and receive a minority equity stake in the data-over-satellite venture, Howard said. He said he expected it would take a month or so to agree on terms.
In discussing the KaStar investment, Malone said Ka-band satellite antennas can be configured for full two-way data transmission. Therefore, Ka-band could be a platform for "bidirectional, affordable - if at a somewhat premium price - access to the @Home network" even outside @Home's 50-million-home footprint.
"We still believe that is a very attractive adjunct opportunity for @Home," Malone said, adding that the financial returns would not be as great because TCI would not own the satellite network.
An alliance between TCI and Loral would seem to fit both companies' goals. Loral has indicated it wants to forge alliances with outside companies that would develop the service applications that would run on CyberStar, analysts said.
Patti Reali, a DataQuest analyst who tracks the upcoming data-over-satellite networks, said, "If [TCI] has [satellite] slots, I guess there's a good chance that there could be some fit there, because Loral has basically said they're not going to go it alone for all applications."
CyberStar's technology plans also map with TCI's because CyberStar is committed to open TCP/IP (an Internet protocol standard) and digital video standards, executives with the start-up said during a phone briefing last week. TCI is also vigorously committed to open standards.
They also said that CyberStar's potential as a link between TCI and @Home is plausible, but "too premature" to detail.
And TCI doesn't want to have to build the satellite infrastructure needed to extend @Home to the skies.
At the Denver conference, Malone said he thought providing high-speed data over a satellite network could be cost effective.
He added: "But I don't think we really want to buy the dairy to get a little milk." MCN |
