When your wrong your wrong. Legaly, Primestar could have won the battle with the DOJ. They had one tenth of the case that they currently have against Microsoft. I had what I thought was a lot of good information from both govermental agencies and the players involved in negotiating a settlement. It should now be clear that those who represented TSATA in the negotiations failed to protect the interests of shareholders.
The issue was that whomever bought the stock from the cables recieved instant value from the approval of 110. This would have been a very viable business with the migration of over 2 million subs to DBS and another 1.3 million from C-band. THe model would have worked, but as I now know, this was more a game of show, than a game of business. THe cable owners, against their public and private statements that they would do what it takes to get the deal done, were hollow. I misjudged both the cable partners (board members of Primestar) and the DOJ. Lost a little over 2 million for the effort. Posting more would not get me that money back. Sorry If you lost money on the stock, but so did I. I wrongly focused on the legal issue when it was in the end CASH BURN that is the make or break for Primestar. Now that the cable companies have rejected a deal to sell their stake and appease the DOJ, allowing Primestar into the logical extension and upgrade of their business, they'd better pony up the cash to fund the "cable plus" concept and not allow Primestar to flounder and die by the end of the third quarter. If the cables don't provide the funding (assuming the high yield market won't), then a very nice lawsuit should come their way. Had they sold at 4 or 5 per share, we would have a competitor in Primestar and the DOJ would have approved the deal. THey rejected it knowing the funding requirements of this business. Breach of fiduciary obligations to shareholders is serious business. I think many shareholders plan to hold them accountable.
As for the DOJ. They deserve applause here. They have serverd justice and saved the consumer from the cable tyrants. By preventing this deal, they have created a duopoly. Find any economics book that shows a duopoly being better for the consumer than 3 competitors. Prices and channel selection along with innovation in technology will happen faster with two competitors rather than three (joke). Don't forget that the company they attacked has the number 1 customer satisfaction ranking. The DOJ helped Charlie Ergen and attacked Primestar with an antitrust case that would have failed simply to knock down the cable owners (a legal monopoly that the DOJ can't touch) of Primestar.
I still think Charlies idea of delivering local channels is a bad one. HDTV signals will be a big bandwidth hog. We shall see. I can't wait to see how the FCC justifies this transaction after explicitly forcing 3 seperate owners of the full conus spots. Direct TV's opposition filing to this deal will be riddled with so many contradictory statements as to be laughable. In the end. I have not a clue what will happen to TSATA over the coming months because I took my loss and have moved on.
I did just pick up a few points on USSB last week. With DBS 1 running on a backup SCP and USSB having no rights on DBS 2 or 3, they have their backs against the wall. Direct TV has plans to launch a new bird during the summer, but they aren't inviting USSB to come along. That is why USSB went up last week. They are in a bad position if DBS 1 fails with no back up. Looks like a shotgun marrige. I am playing this one safe and sold some at 9.25. I'm holding the rest to see if a deal gets announced. What else can they do? |
