SkyREPORT.COM News Headlines
News Update For 3/20/00
Iridium Burns Out
Iridium was shut down a minute before midnight Eastern Time Friday, leaving around 55,000 customers without service and 66 satellites to burn in the atmosphere. There were a number of last-minute bidders for assets controlled by the bankrupt company, but attorneys for Iridium told a bankruptcy court in New York that the service couldn't find a qualified buyer. "I am deeply saddened by this outcome," said Iridium COO Randy Brouckman. "I particularly regret the impact this will have on our customers. "Iridium achieved significant milestones, and I want to thank the more than 160 countries that licensed the service and the distribution partners around the world who helped market Iridium," he said. "Finally, I have had the honor and privilege to work with a world class team both here at Iridium and at our gateway partners around the world and I want thank them for all their hard work." The last request Iridium made to the court was for the release of $8.3 million to pay for closing the operation. Part of that money was aimed at de-orbiting satellites and sending them crashing into the atmosphere, where they will burn. Motorola said there will be a "controlled process" for de-orbiting the satellites, and some said it could take months or even a year to yank the constellation from the sky. Meanwhile, Iridium's chief competitor, Globalstar, reached out to subscribers of the former sat-phone service. Through Globalstar USA, a unit of Vodafone AirTouch, distributors are offering Globalstar phone rebates for Iridium customers.
Sears Sues DirecTV
During the weekend, Bloomberg reported that Sears, Roebuck & Co. filed a lawsuit against DirecTV, claiming that the company didn't provide proper customer accountings and commissions to the retail giant. It's the latest of several lawsuits brought against the DBS provider. Last month, competitor EchoStar filed a suit against DirecTV over alleged monopolistic practices. The suit was followed by a counter-claim filed by DirecTV last week. The National Rural Telecommunications Cooperative, Pegasus and Golden Sky also are in litigation with DirecTV over access to premium channels. Sears is reportedly seeking $23.2 million in damages. The claim was filed in superior court of California in Los Angeles. Because of the weekend, DirecTV spokespersons were not available for comment. In the suit, Sears alleged that DirecTV agreed in 1998 to pay past-due commissions and settled on a formula for Sears' ongoing commissions. DirecTV then ended the agreement that allowed Sears to sell its service in August 1999 and told the company in October 1999 that it would not pay any further commissions. In addition, Sears said personal TV provider TiVo, a partner of DirecTV, didn't live up to its agreement to show the Sears logo on commercials broadcast on DirecTV. Sears had agreed to sell hardware that's needed to operate the TiVo service in exchange for having its company name "tagged" on TiVo's advertising.
TSAT-Liberty Complete Deal
TCI Satellite Entertainment and Liberty Media Group closed on their previously announced deal, forming a joint venture called Liberty Satellite that will buy stakes in satellite broadband companies. Under the transaction, first announced in December, TSAT also received 5.1 million shares in Sprint's wireless unit from Liberty Media in exchange for 150 million shares of TCI Series A and Series B stock. The entity already has stakes in Astrolink and iSKY, both satellite-based platforms.
SkyBOX: Bright Stars and Biz Flameouts
Sometime over the next few weeks, a preternaturally bright star could flare across the Indian Ocean as the first of Iridium's 66 satellites plunges into the atmosphere and burns into oblivion. Left behind will be the debris of one of recent history's most spectacular business flameouts: 55,000 disenfranchised customers, $4.4 billion in debt, thousands of irate investors and rusting gateways scattered across the globe. Of all the bitter lessons to be learned from the Iridium debacle, two seem most pertinent to today's new communications universe:
- Never underestimate the potential for growth and change in competing technologies. When Iridium first went to the drawing board, cellular telephony held sway in relatively small pockets of the world. By the time the low-earth orbit system came to fruition, cell phones blanketed most first-, and even second-, world countries. So it is that in today's cable television industry some new video-on-demand services are glancing nervously over their shoulders at the emerging strength of DVR services such as TiVo and Replay. Will the VODs meet the same fate as Iridium? Very unlikely, in our opinion, although potential VOD markets will certainly have eroded. But it's a lesson well worth pondering.
- Never bet on technology for technology's sake. The Iridium system was conceived by and for engineers at a company (Motorola) determined to advance its foothold in the satellite communications business. Considerations such as who would buy the service were left until the actual system launch. Thus Iridium ended up offering a clunky, expensive phone service which wouldn't work in most buildings and cars to a pool of already well connected international roamers. So it is that we look with some wonder on some of today's new interactive television services. Once the newness has worn off, will people really pay to click on their screens for obscure details of the show/stars/or whatever? We don't know; but it should be interesting to find out.
Meanwhile, on the other end of the spectrum, the cable television industry said goodbye this past week to one of its brightest stars. Like the treasured, cherry-red Cadillac he once gave to a down-and-out friend, Bill Daniels shone across the cable landscape. He was a man who kept his word, paid his debts and never turned his back on a friend. The satellite television industry should be so lucky.
PEOPLE: Lifetime CEO To Keynote T Howard
- Lifetime CEO To Keynote T. Howard - The T. Howard Foundation announced that Carole Black, president and CEO of Lifetime Entertainment, will be the keynote speaker for its annual fundraising dinner themed "Celebrating Diversity Into The Next Millennium." The event, held to support programs that provide information and career opportunities for women and minorities eyeing the satellite and telecommunications industry, will be held Tuesday, March 28, at the New York Marriott Marquis. ESPN sports commentator Robin Roberts will host the event. For more information, contact Benne Gallion at 703-549-6990, ext. 368.
- Lund, Cornelius Named To Hughes Board - Peter Lund, former president and CEO at CBS, and James Cornelius, chairman of Guidant Corporation, were elected to the board of directors at Hughes Electronics. The election brings the board membership to 11.
- Sams Elevated At Turner - Louise Sams was named senior vice president and general counsel for Turner Broadcasting System. Sams was formerly senior vice president and general counsel for network distribution, advertising sales, international networks and general corporate issues. She will now oversee all company legal teams.
- Bauer To Leave HBO - Vinnie Bauer, head of HBO's satellite marketing operations since April 1991, plans to exit the top premium program provider May 1. She has spent 20 years with the company. The editorial staff extends its best wishes to Vinnie and her family.