PrimeStar Examines Core Business5/17/1998 8:00 PM Eastern
A month-and-a-half into its roll-up from a partnership,
PrimeStar Inc. has faced such a heavy blow to its long-term business plan that it's
hard to say whether the roll-up is helping the company overall.
A U.S. Department of Justice antitrust suit last week has
put on hold any plans that PrimeStar had to go forward with a move to a high-power
direct-broadcast satellite business using the 110 degrees west orbital spectrum from News
Corp. and MCI Communications Corp.
In a statement last Friday, PrimeStar president and chief
operating officer Dan O'Brien said, "The company will be assessing a variety of
medium- and long-range alternatives" for its business.
In late April, PrimeStar officially gave up any short-term
plans to launch a 120-channel DBS service at 119 west. That happened after the Federal
Communications Commission extended Tempo Satellite Inc.'s due-diligence deadline
until six months after the commission issues a decision on a PrimeStar approval at 110. As
part of the license extension, the FCC has prohibited Tempo from executing its lease
agreement with PrimeStar at 119 until the FCC rules on 110.
Uncertainty also overshadows PrimeStar's recently
announced plans to buy United Video Satellite Group Inc.'s 1.2 million-subscriber
C-band satellite business, which was set to close by the end of May. The adverse affect on
TCI Satellite Entertainment Inc.'s (TSAT) stock prices following the DOJ announcement
makes the deal less favorable to UVSG, which would have been paid in preferred securities.
A PrimeStar spokesman said both sides remained
"committed in principle" to the deal, although no assurances can be made about
PrimeStar has nearly 2.1 million subscribers generating
healthy cash flow at its core medium-power DBS business, the company said last week.
PrimeStar said it had signed 19,647 new subscribers in the first three weeks of April, and
total subscriber numbers posted March 31, prior to the roll-up, were underreported by