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Technology Stocks : Primestar/TCI Satellite (TSATA)
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To: EPS who wrote (119)10/15/1998 6:01:00 PM
From: JDCFA  Read Replies (2) of 442
 
TSAT = Classic ARB Overplay
ASkyB was not worth $1.1b. Cap-X associated with start up would have been excessive at a time when economy isn't doing so well. Was hoping to see deal happen just for short term pop. Longer term, however, overpaying for this asset (record high valuation) was a risky strategy.
Why the deal broke off:
1- Rupert wanted Cable to take haircut but wasn't willing to take haircut himself. Also, didn't want to use his own money?
2- Cable. thought Rupert was being overpaid and didn't want to be bottom ticked.
3- DoJ. Just didn't want this deal to happen. Big business is bad.
Where Now:
1- ARBS bail out. Have a nice day.
2- Medium power benefits from management's focus. Finally, in August of this year, marketing initiatives were introduced, 5 new anti churn measures effected.
3- With help of cable 119d becomes value priced reality. Not a bad niche product given slow economy.

Conclusion: Medium power is underpriced. 119d can either work as a niche product or be sold. Once med. power business is stabilized, all kinds of things become possible. Over 100m gross subs last month and this month, anti churn measures and consolidation of partners subs near completion should make people realize there is some value here.
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