Intelsat Seals PanAmSat Deal
By Glen Dickson -- Broadcasting & Cable, 7/3/2006 7:16:00 AM
Intelsat’s $3.2 billion acquisition of PanAmSat has finally closed, positioning the company as the world’s largest satellite operator.
The PanAmSat acquisition, first announced in August 2005, has a total transaction value of $6.4 billion. In addition to paying $3.2 billion in cash to acquire PanAmSat’s 23 satellites and associated ground facilities, Intelsat also assumed $3.2 billion in PanAmSat debt. The deal has already undergone various layers of regulatory approval, passing Department of Justice antitrust muster in May and gaining the FCC’s approval last month.
The scope of the new Intelsat is impressive. SES Global, previously the largest satellite operator, has $1.6 billion in annual revenues and 43 satellites. The new Intelsat has roughly $2 billion in annual revenues, 51 high-power satellites in operation and five more birds under construction, and some 1,800 customers.
While Intelsat has traditionally served international markets such as Africa and Asia and carried more data and voice traffic than television feeds, PanAmSat has been historically strong in covering North and South America and has focused heavily on media customers. By integrating PanAmSat’s stable of broadcast and cable customers, Intelsat’s revenue mix changes considerably. Before the PanAmSat acquisition, 63% of Intelsat’s revenues came from network services and telecom customers and 20% from government and military contracts, with only 17% being contributed by media clients, mostly for providing contribution links for global events such as the Olympics and World Cup. Now the company projects 38% of revenues in 2007 (on a pro-forma basis) will come from media clients, with 47% coming from network services and telecom customers and 15% from government business.
Intelsat’s overall carriage of video should only increase, says CEO David McGlade.
“When we look at the amount of contracts we have on hand, the backlog [such as agreements for future capacity] is heavily weighted to the video side,” says McGlade. “Convergence truly is here. All of our customers want video, voice and data now, even our government customers."
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