Tele-Communications Inc. officials are in
talks with satellite providers, including Loral Corp., about the
potential for delivering a satellite version of the @Home Network high-speed-data
service, according to sources close to the talks.
In addition, sources said, Loral and PrimeStar Inc., which
is 36 percent-owned by TCI spinoff TCI Satellite Entertainment Inc. (TSAT), have batted
around potential deals that would see Loral gain access to PrimeStar's 11
high-power satellite frequencies at 119 degrees west longitude.
PrimeStar has a Loral-built satellite orbiting at 119
degrees now. But that satellite suffered a serious power loss and has not yet been
formally accepted by PrimeStar. Loral is eager to shed a potential liability associated
with the satellite's problems and wants to tap the high-power capacity, sources said.
PrimeStar, meanwhile, may be forced to shed the frequencies
at 119 degrees to win government approval of its pending $1.1 billion deal to buy 28
high-powered frequencies from MCI Communications Corp. and News
Corp. at 110 degrees west.
PrimeStar, whose other owners include four major cable
operators, does not want to see those frequencies end up owned by EchoStar Communications
Corp., a rival satellite service that also operates from 119 degrees.
"So each side needs something that's the
makings of a deal," a source familiar with the talks said. But the source cautioned
that the talks have been held on and off for months, and may not be active at this time.
While the status of the PrimeStar-Loral deal is unclear,
TCI executives said talks involving various TCI assets and Loral's planned CyberStar
data-over-satellite network are active.
A senior executive close to the discussions said TCI and
Loral had hoped to break the news of a partnership at Loral CEO Bernard Schwartz's
CyberStar press conference at the National Association of Broadcasters Conference in Las
Vegas today (April 6). The deal could not be pulled off in time, though, the source said.
Loral spokesman David Benton said last week that the
company would not comment on "speculation."
But TCI executives, including chairman and CEO John Malone,
openly discussed the potential for a high-speed data alliance with a satellite network at
TCI's March 24-26 lenders' and analysts' conference in Denver.
They did not disclose potential partners, but TCI
executives later confirmed there have been discussions with Loral as well as with other
At the conference, Malone explained that TCI-controlled
United Video Satellite Group invested last fall in KaStar Satellite Communications Corp.,
a company that controls licenses to offer so-called Ka-band satellite services, because of
the potential to extend @Home nationwide. Hypothetically, Malone said, if @Home were to
strike a deal with BankAmerica Corp. similar to the bank's agreement with TCI on set-top
devices, a satellite platform would allow BankAmerica to reach customers within its
territories that aren't served by TCI cable systems. TCI has consolidated UVSG within TCI
Ventures Group, which also holds TCI's controlling stake in @Home's parent company, At
Gary Howard, who is CEO of both UVSG and Ventures Group,
had said in response to a question about Ka-band plans that UVSG had "stepped
back" from backing Ka-band development at KaStar because TCI was approached by
another company that had plans of its own.
"We got to talking to someone about that [and] they
had a particular idea of which we could play a servicing role and pick our own equity
position," Howard said.
Later, Howard said the talks were aimed at combining UVSG
and @Home services with the unnamed potential partner.
He said the aim was creating a "better" version
of DirecPC, the Hughes Network Systems service that sends high-speed data to home
receivers via satellite but requires a telephone line for outgoing data.
If a deal is struck, UVSG would contribute assets,
including a service agreement, and receive a minority equity stake in the
data-over-satellite venture, Howard said. He said he expected it would take a month or so
to agree on terms.
In discussing the KaStar investment, Malone said Ka-band
satellite antennas can be configured for full two-way data transmission. Therefore,
Ka-band could be a platform for "bidirectional, affordable if at a somewhat
premium price access to the @Home network" even outside @Home's
"We still believe that is a very attractive adjunct
opportunity for @Home," Malone said, adding that the financial returns would not be
as great because TCI would not own the satellite network.
An alliance between TCI and Loral would seem to fit both
companies' goals. Loral has indicated it wants to forge alliances with outside companies
that would develop the service applications that would run on CyberStar, analysts said.
Patti Reali, a DataQuest analyst who tracks the upcoming
data-over-satellite networks, said, "If [TCI] has [satellite] slots, I guess there's
a good chance that there could be some fit there, because Loral has basically said they're
not going to go it alone for all applications."
CyberStar's technology plans also map with TCI's because
CyberStar is committed to open TCP/IP (an Internet protocol standard) and digital video
standards, executives with the start-up said during a phone briefing last week. TCI is
also vigorously committed to open standards.
They also said that CyberStar's potential as a link between
TCI and @Home is plausible, but "too premature" to detail.
And TCI doesn't want to have to build the satellite
infrastructure needed to extend @Home to the skies.
At the Denver conference, Malone said he thought providing
high-speed data over a satellite network could be cost effective.
He added: "But I don't think we really want to buy the
dairy to get a little milk." MCN