Amid widespread reports that PrimeStar Inc. is stepping up
talks to hire a new CEO, the company negotiated an extension last week to reply to charges
in an antitrust suit filed by the Department of Justice last month.
PrimeStar now has until June 17 to file its response.
While PrimeStar said it still plans to hire a new CEO, the
company would not comment on speculation that former EchoStar Communications Corp.
president Carl Vogel -- now CEO of Canadian direct-to-home service Star Choice -- was a
front-runner for the slot.
Early last week, Vogel, who said he has read the reports,
declined to comment.
Industry observers endorsed Vogel's qualifications for
the job. Some said a candidate with such close ties to the direct-broadcast satellite
industry could go a long way toward helping PrimeStar to convince the DOJ that the company
is no longer orchestrated solely by cable insiders.
On May 13, the DOJ filed suit to block PrimeStar from
merging with American Sky Broadcasting Inc., the DBS arm of News Corp. and MCI
Communications Corp. PrimeStar hopes to negotiate a settlement with the DOJ that would
grant the company access to ASkyB's 28 high-power DBS transponders at 110 degrees
west longitude -- the last available full-CONUS (continental United States) spectrum.
Analysts said last week that it will be up to PrimeStar to
move the talks forward.
"The DOJ has no incentive to settle this
quickly," said Steve Blum, president of California-based Tellus Venture Associates.
Ted Henderson, an analyst with Denver-based Janco Partners,
said there's still a shot that PrimeStar could appease the DOJ. For its best chance,
he said, PrimeStar should make sure that cable interests are not represented on its board,
that cable has no voting shares in the company and that a cable insider does not take the
helm as CEO.
"The message was so clear from Justice: 'If
there's cable involved, we're not going to allow this,'" Henderson
said. "It's time to get going, especially if they want to launch a [high-power]
service in time for this year's selling season."
Mickey Alpert, president of Washington, D.C.-based Alpert
& Associates, said PrimeStar should bring in new owners and private investors. There
has been speculation that PrimeStar is seeking higher stakes from News Corp. and GE
Americom -- which now holds 4 percent -- to help reduce overall cable ownership in the DBS
venture. But keeping the same players with shifted ownership levels may not be enough to
mollify the DOJ.
"They might think that it's the same bad apples
with a new spin," Alpert said.
Reduced cable ownership may be needed to attract a new CEO,
too. Henderson said he didn't think that a top-level executive would commit to the
CEO position without a firm commitment that PrimeStar would compete against cable.
According to sources, Vogel is a fierce competitor who
would also give DBS rivals DirecTv Inc. and EchoStar a run for the money.
"EchoStar would not be happy," suggested Jimmy
Schaeffler, chairman and CEO of The Carmel Group. "Carl knows its modus operandi, and
he would be able to second-guess EchoStar very well."
Vogel, who also had prior cable experience with Jones
Intercable Inc., was instrumental in structuring EchoStar's deal with News Corp.
Vogel left EchoStar shortly before the deal went sour, and News Corp. subsequently
proposed its ASkyB merger with PrimeStar.
Vogel's one-year noncompete clause with EchoStar is
said to have expired in March. Former colleagues of Vogel said he would prefer to stay in
the Denver area, which he still calls home, along with his wife and five children.
PrimeStar also confirmed last week that its deal to
purchase more than 1 million C-band satellite customers from United Video Satellite Group
Inc. has been put on hold. The deal had been set to close May 31, but it was delayed
following the DOJ decision because PrimeStar's stock was undervalued. UVSG was to be
paid in stock options.
According to spokesmen for both PrimeStar and UVSG, neither
side has backed away from the deal completely.