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Technology Stocks : Primestar/TCI Satellite (TSATA) -- Ignore unavailable to you. Want to Upgrade?

To: Bill on the Hill who wrote (198)	1/21/1999 9:48:00 AM
From: Noel	Read Replies (1) \| Respond to of 442

Hmmm... do so many of you really think this deal is a good thing? Here's a news flash: If DIRECTV does a deal, they will only pay for the subs they can convert. That means a pay-as-you-go formula that is crushing bad news to shareholders. I am often wrong, but since the rumored upfront payment for the satellites ($500m) is less than the amount of the accompanying Tempo debt ($575m) alone, how is it possible that there will be even $1 per share left over for shareholders? Now, let's examine this arrangement more closely. DIRECTV agrees to pay for each sub they convert. Wow. Would DISH be prohibited from making an equally great conversion offer directly to Primestar subs? Could they even sweeten it over DIRECTV's offer since they don't have to bear the costs of paying ANYTHING to Primestar? I bet they could, and DISH's Mr. Ergen has a history of making competitors pay for their trophies (see News Corp./MCI's $682m purchase of the 110 slot in January 1996). Once Primestar subs realize that they are in play, will 100% go like lemmings to their approved buyer? Absolutely not. And even discounting the numbers that defect to DISH (which will be substantial, in my opinion), is it possible that some Primestar subs will fail to be counted as conversions (ostensibly due to some bug in the DIRECTV authorization system)? Or that they will be disqualified for late payment and not be counted? At that, how to you count to 2.3 million by ones and not make some mistakes? Of course, they will not OVERCOUNT the subs (only Primestar can do that - see their January 1997 downward revision of subscriber numbers). Let's face it: the terms (as they have been rumored on this thread, and they seem to represent a kernel of truth) actually represent a liquidation of Primestar. Don't be surprised if only 30-40% of Primestar's subs will ultimately be counted as converting to DIRECTV (which would only make a deal like this one in an attempt to blunt DISH's recent momentum on Wall Street). Finally, if you are shorting TSATA, the real question is how long can you hold on before shareholders realize this is a bondholder deal and they are screwed? If you have the resources to wait, DON'T cover your short - this stock is as overpriced as ever. But remember: Primestar subs may not be lemmings, but many of Primestar's investors are... Regards, NOEL ps. when I refer to Primestar investors as lemmings, I do not mean the regulars of this thread, but rather the current crop that have boosted this rotting corpse of company on their shoulders and are carrying it like a hero all the way to its shallow grave...