SMS Tries to Block EchoStar-WSNet Deal - Multichannel

SMS Tries to Block EchoStar-WSNet Deal

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EchoStar Communications Corp. agreed to buy some of the assets of troubled
WSNet Inc. out of bankruptcy court Monday, but another bidder is trying to block
the sale.

EchoStar, through a Colorado holding company called WS Acquisition Corp.,
agreed to purchase WSNet's assets for $1.9 million Feb. 27, according to
documents filed in U.S. Bankruptcy Court for the Western District of Texas
Monday.

But one of the losing bidders -- Satellite Management Services Inc., a Tempe,
Ariz.-based provider of cable service to apartment buildings -- said the closing
was too late.

WSNet provided digital programming and transport services to small and rural
cable operators and to about 650,000 customers in apartment buildings.

WSNet filed for Chapter 11 bankruptcy protection Oct. 24.

In court documents filed March 3, SMS said it was the backup bidder to
EchoStar, offering $1.825 million for the assets. The third bidder for the
assets was One Source Power Corp., doing business as TeleVentures. The
TeleVentures bid amount was not released.

According to SMS -- which primarily provides cable service to
multiple-dwelling units in Arizona -- WS Acquisition was expected to close its
deal with WSNet by 2 p.m. CST Feb. 28.

But when the company did not meet that court-imposed deadline -- it actually
closed at 11:45 p.m. CST March 2, according to the document -- it claimed that
the WS Acquisition bid became void, leaving SMS as the winning bidder.

SMS is asking the court to set aside the WS Acquisition bid and declare SMS
the winner. SMS claimed that it can close the transaction by March 4.

WS Acquisition purchased certain contracts from WSNet for the delivery of
programming services, its customer lists, headend digital overlay programming
from the G4-R satellite, all billing systems and software and all customer
account information.

According to West Jefferson, N.C.-based Ashe County Cable owner Jeff Smith,
WSNet's T-6 satellite went dark Feb. 28. While the G4-R satellite is still
operating, it was the T-6 that was most important because it provided
programming like ESPN and Chicago Superstation WGN-TV. The G4-R mainly provided
digital networks.

"We're going to turn it off and go home," Smith said of his WSNet system with
about 120 subscribers.

Ashe County has another small operation with between 300 and 400 subscribers
that was not a WSNet customer, and it will continue.

Smith said he had invested about $64,000 for WSNet equipment for the system,
but now that EchoStar has his customer list, it makes little sense to try to
find an alternative provider.

"[EchoStar] bought [WSNet] to kill the competition," he
added.

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