Almost a month to the day after Liberty Satellite & Technology Inc. agreed to pump more cash into struggling broadband satellite company WildBlue Communications, Liberty Media Group 's satellite subsidiary said Thursday it would acquire "substantially all" of the assets of Astrolink.
Liberty Satellite & Technology currently has a 31.5 percent stake in Astrolink. Lockheed Martin, Northrop Grumman and Telespazio S.p.A. own the remainder of the budding, Bethesda, Md.-based satellite broadband firm.
Formed in 1999, Astrolink originally planned to launch nine advanced Ka-band satellites to create high-speed footprints in the Americas, the Atlantic, East Asia and Australia, Europe, Africa, West Asia and Oceania.
Under the new agreement, Liberty Satellite will acquire Astrolink's assets. In turn, Astrolink has contracted Lockheed Martin and Northrop Grumman to build two satellites. The deal is expected to close before Oct. 31, 2003, but is subject to regulatory approvals and other closing conditions, including Liberty Satellite securing "satisfactory" funding to fulfill the aim of the Astrolink project.
Upon closing, Liberty Satellite will pay about $43 million in cash and issue roughly $3 million in series A common stock. Additionally, Liberty Media will pay Liberty Satellite an amount equal to 10 percent of its equity holdings (up to a maximum of $55 million) in Liberty Satellite at the time of closing, in exchange for shares of Liberty Satellite's series B common stock.
Liberty Satellite said it plans to create a revised operating plan for Astrolink. That will likely include the launch of Ka-band satellites to serve enterprise customers and government agencies, the company said.
Liberty's strategy to target the commercial sector will likely complement its residential broadband plans involving WildBlue, another Ka-band service. Late last year, Liberty Satellite, Intelsat and the National Rural Telecommunications Cooperative agreed to give cash-strapped WildBlue a $156 million shot in the arm.
Instead of targeting businesses, WildBlue will go after the consumer broadband sector when it launches services in 2004. More specifically, WildBlue will focus its energies on rural areas not reached by DSL and high-speed cable lines.
Liberty could leverage its combined residential/enterprise broadband satellite activities if the company, along with News Corp., is successful in acquiring DBS giant DirecTV Inc. News Corp. and Liberty Media have also held informal acquisition discussions with EchoStar Communications Corp., the Wall Street Journal reported earlier this week.