The sticky points--are the insurance proceeds restricted to use by Orion in some way because of the non-recourse nature of the debt?
Excess cash--do they really have excess cash? The burn rate shared on the conference call was $100 million/quarter. If G* needs a bit more of an infusion, then LOR is cash poor once again.
A piece from last year, but relevant now:
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 controllin
g 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
- 4/3/98 |
