Primestar to Fire 250, Start New TV Service: Bloomberg Forum
Englewood, Colorado, Nov. 24 (Bloomberg) -- Primestar Inc. expects to fire 250 people as it cuts
costs and prepares to debut a new satellite television service next year, Chief Executive Carl Vogel said.
Primestar, the No. 2 U.S. satellite TV provider, expects to eliminate the positions as it restructures the
company and embarks on a new strategy, Vogel told the Bloomberg Forum. Moreover, the company is
in the final stages of choosing the channels it will offer through a new high-power satellite service that will
employ 18-inch dish antennas instead of the larger medium-power dishes now offered by Primestar.
Vogel recently won shareholder approval for a two-prong strategy that takes advantage of Primestar's
existing satellite business with 2.2 million subscribers and proposes to launch a high-power service that is
more attractive to consumers. Primestar's future was uncertain after it called off plans in October to buy
American Sky Broadcasting Co.'s high-power satellite slot rights because of antitrust concerns. ''We're
essentially reducing our workforce ... by about 250 positions, which will probably save us somewhere in
the $10 million to $12 million range in the long term,'' Vogel said.
The Englewood, Colorado-based company hasn't determined its capital needs because it hasn't
completed its plans for developing the high-power service. The company needs money for marketing,
equipment and TV set-top boxes as it takes over transponder space on a satellite licensed to Tempo
Satellite Inc., an affiliate of Primestar stockholder TCI Satellite Entertainment Inc.
Primestar will start the new service in February or March, pending approvals from the Federal
Communications Commission, Vogel said.
Additional Financing
Primestar's shareholders approved a plan for the the company to obtain additional financing, which could
total several hundred million dollars for the new venture. Vogel declined to disclose specifically how
much funding is required, and said it will probably come from several sources, including one or more
current shareholders, vendors and issuing debt securities. ''I think that the market is going to look for the
commitment of our shareholders, and that commitment will dictate, I think, to a greater degree, the
commitment of the financial markets,'' Vogel said. ''We're looking at all available capital- raising ideas at
this point.''
Meanwhile, Primestar has adequate bank credit lines to operate its medium-power business, Vogel said.
Standard & Poor's Creditwire lowered the company's corporate credit, bank loan and subordinated
debt ratings last month because Primestar aborted the ASkyB purchase and an acquisition of another
satellite TV operator.
Primestar's shareholders include Time Warner Inc., Newhouse Broadcasting Corp., Comcast Corp.,
MediaOne Group Inc., Cox Communications Inc. and TCI Satellite.
Primestar wanted to buy ASkyB's rights for $1.1 billion and build a high-power system that is
competitive with other satellite TV offerings. The Department of Justice opposed the purchase because
of concerns that Primestar's cable owners were trying to prevent ASkyB from starting its service and
competing with the cable industry.
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