Sirius stays flat on Worldspace reports
Chris Forrester

The news that Sirius Satellite Radio is keen to help Liberty Media in its push for an international service, using Worldspace, hasn't impressed the US share price one jot. See also the separate story today on radio technology company Delphi signing an exclusivity deal with Ondas Media.

Sirius (SIRI) has traded at around 60-70 cents since September, and while every 1 cent move up or down makes a meaningful difference to the pay-radio broadcaster's market capitalisation (currently $2.46bn, and with trading at 64c), it would seem fair to say that Sirius' shareholders seem not to be that impressed by any thoughts of an international roll-out for Sirius. CEO Mel Karmazin has fairly stated that he didn't see any international investment plans for Sirius other than there could be opportunities on the revenue side of the balance sheet.

Which brings us to Liberty Media (40% shareholder in Sirius). This coming week Greg Maffei (Liberty's president/CEO) will be addressing UBS' Global Media conference at the Grand Hyatt, New York.

We might learn something new from his presentation, but meanwhile there's the question of wrapping up Worldspace's Chapter 11 bankruptcy, which is ongoing. A meeting that was originally scheduled to take place at the Delaware Bankruptcy Court last week (Dec 2) was scrubbed. Worldspace now has until January 31st to file a restructuring plan and has until April 1st to - hopefully - wrap its bankruptcy protection up although it is worth stressing that these dates can be extended.

However, it would seem from a reading of the various Court filings by the assorted lawyers to Worldspace that Liberty is firmly in the driving seat for the failed radio broadcaster and in effect controls the two somewhat tired Worldspace satellites (AfriStar and AsiaStar), both now nearing the end of their working lives. Afristar was launched in October 1998 and has solar-panel problems, and with an operational design life of just 12 years - which is close - although it could stay on station (+/- 1 deg) for a further 3 years or so. Asiastar was launched in March 2000, again with a 12-year lifespan, so this craft has a slightly longer "use by" date.

Worldspace also has an ‘asset' in the shape of Worldspace 3, a craft that's sitting in a satellite warehouse in Toulouse. It would be unfair to call it DustSat, given that it is carefully stored in a temperature and humidity-controlled clean environment, but by any measure the satellite now has some tired components that would need replacement - and that costs cash.

This third Worldspace satellite will also need technical modification to permit it to more aggressively target Europe. Finally, a new owner needs to stump up the launch and insurance costs for WS3 - and this means real money measured in the tens of millions of dollars. Liberty Media's satellite arm is going to have to fund this if it hopes to launch a real L-Band service across greater Europe.

To summarise, Worldspace has to emerge from Chapter 11, staff hired and battered relationships rebuilt. Cash must then be paid to fund the modifications of Worldspace 3, then a launch slot secured (and this is not easy) and insurance taken out. This summarised list is but the tip of an iceberg of challenges, and is by no means a pushover even for Dr John Malone.