For sale: Two satellites

In a week’s time on Jan 26 an auction will take place on the instructions of the Delaware Bankruptcy Court with, amongst other assets belonging to Worldspace, two satellites will be sold off. Lot 9 on the asset manifest is Afristar operating over Africa, the Mid-East and Europe, and Lot 10 is Asiastar, both working satellites in Equatorial orbit. How much might they sell for, and who might be interested?

Ageing satellites frequently get sold, or more likely leased by third parties, when they are surplus to their primary mission. Perhaps the most famous sales occurred following the ‘merger’ between British Satellite Broadcasting (BSB) and Sky Television some 20 years ago, when BSB-owned MarcoPolo 1 and 2 were sold off to Scandinavian pay-TV broadcasters. The merged BSkyB had its own long-term contracts with SES Astra and had no need for extra transmission capacity.

Those two satellites were valuable Ku-Band birds. These two Worldspace craft are much more specialised satellites. They operate in L-Band, a frequency used by some of the world’s military, some astronomy uses, the Iridium satellite-phone business, the huge GPS (Global Position System), and Worldspace in the 1467-1492 MHz bandwidth range. Terrestrial DAB uses the nearby 1452-1478 MHz frequencies. The merged Sirius-XM operation uses S-Band frequencies (2320-2345 MHz).

Because all of these businesses use specifically allocated slices of the L-Band it isn’t likely that the Worldspace frequencies would be of interest to any of them – with the possible exception of the US military. In other words, these satellites are likely to be sold to some sort of Worldspace follow-on business, or just possibly the US military.

Afristar was launched in Oct 1998, more than 10 years ago, and the orbiting satellite is not without technical problems (it has solar panel problems). It has about 2 years of operational life left. Asiastar was launched in March 2000, also with a 12-15 year design life.

Interestingly, a third Worldspace satellite is also on offer (Auction Lot 4) which is a ‘ground spare’ satellite that Worldspace had intended to launch back in 2007 to replace the fading Afristar. This might be the most valuable item on offer given that (for a further investment) it could be reconfigured into other frequencies.

The likelihood of a follow-on business making a success of a Worldspace-type pay-radio business using Worldspace assets is highly questionable. Even if all of Worldspace’s debt is wiped out then you are still left with a miserable number of interested subscribers. As at June 30 last year Worldspace had only 170,000 subscribers globally. This number will have shrunk considerably since then.

However, XM Satellite Radio proved that there IS a potentially successful business in pay-radio and using very similar Geostationary satellites PLUS a ground-based repeater system (Sirius used a very different highly-elliptical set of satellites, that needed far fewer ground-based repeaters). Nevertheless, it is worth remembering that while both XM and Sirius successfully won subscriber support, neither of them has turned a profit. Time will tell if the merged Sirius-XM can break through to profitability now that operating costs are being slashed.

Ondas Media is one proposed pay-radio operator looking to start a business over Europe, but tells us that they are not interested in picking up any Worldspace assets.

The Worldspace auction takes place on Jan 26. Three days later Worldspace’s ‘Debtor in possession’ 90 day period ends, and on the same day the judge in the case will rule on the auction results. According to the court’s filings, WorldSpace is in “discussions with a number of potential purchasers” and its financial advisor, The Bank Street Group, says it has contacted numerous potential financial and strategic purchasers of the assets.

Besides the two orbiting satellites, other items on the auction block include 1576 other lots are on offer, ranging from office equipment to sophisticated test and transmission kit. Also up for sale are assorted patents and transmission licences with most countries on the planet covered. Assorted patents covering “Real-time information delivery system for aircraft” might also interest some players, as might Worldspace’s trademarks including AfriSpace and AfriStar.