With Sirius XM Radio (NASDAQ: SIRI) CEO Mel Karmazins recent announcement of possibly getting involved in Liberty’s (NASDAQ: LCAPA) Worldspace acquisition (OTC BB: WRSPQ), it is time to take a look at how it could pan out. I say could, because none of us are privy to what is actually taking place, but it is more apparent now than it ever has been that something is definitely going on between Liberty and Sirius, and Liberty and Worldspace through Worldspace’s Bankruptcy proceedings. The best news for Sirius shareholders is that no cash will be flowing from Sirius, at least not up front, for whatever finally does transpire.
In order to get a better grasp of the picture, let’s take a look at the Worldspace infrastructure. The company has 2 satellites currently in the air, which are nearing the end of their operational life. The company’s stated mission is to provide a variety of high quality programming through a subscription based service that uses low cost portable satellite radios and is available in underserved markets that today lack programming choice. Worldspace is the first and only company with rights to the world’s globally allocated spectrum for digital satellite radio. Its broadcast footprint covers over 130 countries including India and China, all of Africa and the Middle East and most of Western Europe, an area that includes five billion people and more than 300 million automobiles. Its two fully operational satellites and ground infrastructure are based on proprietary and patented technology.
The Worldspace Satellite network has 2 satellites (Afristar and Asiastar) that service 3 large geographic areas, through three beams which that are each capable of carrying up to 80 channels. The satellites are L-Band satellites with traveling wave tube amplifiers and on board baseband processors which link with Worldspace radio receivers. The receivers are equipped with micro integrated circuitry that processes the satellite signal into high quality audio and data transmissions. Broadcasters can uplink their content through a centralized hub site or an individual feeder link station. The satellite then transmits the signal received to any combination of the three downlink beams. Worldspace broadcasts in the frequency 1467-1492 MHz of the “L” band. Worldspace provided four of the original content channel programming on XM Satellite Radio, now part of Sirius XM, America’s and the world’s most successful Satellite Radio company. Worldspace was a founding shareholder of XM, and Worldspace proprietary and patented technology is used in each XM receiver. The Worldspace Satellite Radio Service has been available in Asia, Africa, the Middle East, and parts of Europe.
The Afristar Satellite was to be replaced first, and a new satellite dubbed Afristar 2 was constructed and scheduled for launch in 2008. However, the launch never took place and the satellite was stored in Toulouse France due to financial issues Worldspace was having. The new satellite is more powerful and can cover more of Europe as well as part of Russia. There were several waivers granted for its launch as a replacement for Afristar, and a petition to prevent the permission to launch Afristar 2 from Ondas, the Spanish Satellite start up was denied (“44. IT IS FURTHER ORDERED that the petition to deny filed by Ondas Spain, SL, IS DENIED for the reasons set forth in this Order.”)
as seen here in the releases: http://www2.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/01-04-2006/0004242750&EDATE
We can now speculate that Liberty may launch Afristar 2, giving them good coverage into Europe, and use Sirius content for the European Service, possibly reworking contracts with European Auto makers like Fiat, who had signed on with Worldspace to have radios installed in their vehicles with Satellite chips. Worldspace also had repeater networks in Sweden/Austria, Germany and Italy either fully operational or started. Surely, adding Europe to the mix would also add subscriber numbers to the bottom line for Sirius XM. No doubt the IPod touch and the Iphone would somehow also likely be the platforms to receive the service, and with Liberty having huge reach into the European cable market, especially now with the 100% purchase of Unity media in Germany by Liberty Global, one of John Malone’s other companies which is a global Cable provider; We can begin to see much more clearly the great benefit that the partnership with Liberty has in terms of infrastructure for Sirius XM.
Clearly there is a huge situation brewing for Sirius XM and Liberty shareholders. If it is cut and dry as I have connected here, there are some fantastic moves coming in this stock price, which will alleviate the majority of the concerns in the financial world regarding Sirius XM and both its viability as a business and its ability to service its debt without any more issues regarding growth. As we wait for the situation to be fully revealed, it would appear prudent for people to do their own research regarding these two equities to verify what appears to be going on.
Disclosure: Long Siri
Really need some info on Worldspace. I am a active share holder in SIRI and learned of worldspace about 2 months ago. I own a VERY Large share in Worldspace at a very very low price. It hit .20 cents today and up over 700% today for myself. I did not sell and plan to stick with it incase SIRI and Liberty really do make something big happen… what are the highs that my stock in Worldspace can hit? anyone have any advise? I don’t want to lose out and afraid i might have lost out already.
Joe, Worldspace is in bankruptcy. Liberty bought the debt. Technically, the stock is worthless. If you can sell you better do it quick…somebody is going to end up with nothing.
Steve, interesting article. Looks like a joint venture with real opportunities that may work out well for sharesholders of both companies. Will be watching closely to see how it all plays out. Also, been reading about the Spanish company Ondas starting operations so there is going to be competition?
Boomer,
The Ondas situation could very well hinge on whether or not Liberty gets the assets and launches Afristar 2, the spare/replacement satellite for the current Afristar 1 which is more powerful and has greater access to Europe and even into Russia. Ondas has nothing up in the sky right now. If Afristar 2 gets launched in 2010…it is my understanding that Ondas is somewhat screwed, as spectrum and bandwidth already assigned to Worldspace assets will remain with them so long as that SAT is launched in/by 2010. If the SAT is not launched soon, the spectrum and bandwidth is available for bid again, that is my understanding.
Guys, the French administration has awarded the orbital slot and frequencies over Europe in the full L-band to a third party with no relation to Worldspace. The Afristar2 satellite was designed to launch on an Ariane 4 rocket no longer in commission. Ondas uses a completely different set of frequencies than Worldspace so there is no threat to their forward progress. The terrestrial situation in the L-band is a disaster. The car companies including Fiat can’t stand Worldspace because of their deserved reputation. Sirius can’t help much because the car companies aren’t real fond of them either and the technology is completely different for the radios. Ondas has the leading powerful national broadcasters as announced in several press releases. Strong sell.
It seem to me that if one was going to invest in any of these entities it would be liberty media… They are the ones benefiting from helping siri and now purchasing worldspace equipment through bankruptcy…
roger,
you are misrepresenting what is going on. First of all…WRSP already has repeaters standing in Sweden Austria, Germany, and some in Italy. Second, Fiat already has an agreement with WRSP for Radios. The technology for the radios is EXACTLY the same as the technology that XM came from and in fact…XM was giving WRSP several stations of programming. The Afristar 2 satellite is in storage and waiting for launch. And let me get this straight…the auto manufacturers don’t like SIrius in Europe…..but they love Ondas? You should work for TSCM!
Louis,
What content is Liberty capable of providing? Are they going to R&D brand new satellite chips and technology? Liberty clearly must lean on SIRIUS XM here and leverage their abilities, content and equipment to make WRSP a winning enterprise …imo.As a matter of fact, the Skydock would be a great solution for all those iphones and ipod touches already in Europe!
asm610
I don’t know TSCM but i do know the facts: 11 test sites in Milan does not a network make, the German and Swiss “licenses” were for Worldspace Europe, a now bankrupt French company completely disbanded. The Afristar 2 satellite according to Thales, the company who made it, can’t be flown as is on a rocket that is available today (forget that the satellite itself is 10 years old and half the power of Sirius FM5. The technology is not the same as XM, it is ETSI-SDR based which is a european standard created in the past 3 years and far more capable than anything Sirius XM can offer. The Fiat contract is suspended. Renault, Nissan and BMW announced signed contracts with Ondas representing a comprehensive market pull (>10M vehicles).
First Afristar 2 is not 10 years old…second. all the debt of WRSP is currently in Liberty’s hands…hence so will the assets be
Plans to launch a third satellite, AmeriStar (a.k.a. CaribStar), to serve South America, Latin America, and the Caribbean from 95.0° west longitude were not carried out as the L-band frequencies used by 1worldspace are commandeered by the United States Air Force. This satellite was reconfigured and is now known as AfriStar 2. AfriStar 2 was to be launched to 21.0° east longitude in August 2007.
This satellite, not yet launched as of the present,due to financial difficulties, is intended to expand coverage for Western Europe in addition to the existing coverage of AfriStar 1, which it will eventually replace. Worldspace will use ETSI Satellite Digital Radio (SDR) open standard in the new European coverage beam. The satellite is currently in storage at EADS Astrium’s and Thales Alenia Space facilities in Toulouse, France and Stevenage, U.K. A fourth satellite of identical design, for which long lead parts have been procured and partially assembled, is also maintained in storage in Toulouse, France and can be integrated and tested for launch in an abbreviated period of time.
Each satellite has a design life of twelve years, with an orbital maneuver life of 15 years, which means that each satellite has been designed and fueled to maintain its assigned orbital position (within 0.1 degrees) for 15 years.
“The system in question, called European Satellite Digital Radio, is being designed by Alcatel Space of Paris — the prime contractor for the current WorldSpace satellite and ground system.
Jean-Francois Migeon, Alcatel Space vice president for regulatory matters, said Alcatel’s reservation of satellite-radio frequencies over Europe with the International Telecommunication Union in Geneva has been renewed regularly since 1998. He said June 3 that the reservation gives Alcatel until 2010 to place into service a satellite.”
Don’t know where you are getting your info…but its not right!
Roger, You do realize that Ondas doesn’t even have a satellite in the air yet …right.
Ok, a good debate here finally. One, Alcatel doesn’t “own” the Musicaa filing anymore. Two, Ondas will start service in 2010 – go figure that out. Three, the Military Airborne Telemetry System referred to is why Afristar 2 or any other L-band system will always be less than half the power (3dB) required to operate if it is ever allowed to operate and if it can ever technically get into operations ( i say it can’t) . Four, “Content, Content, Content” (a Mel Karmazin and Hugh Panero quote). Five, the open standard for SDR created by Ondas and WS in better days makes Sirius XM technology irrelevant (the original point of this debate). Six, got to understand Europe, or they have no idea what this debate is about. Failing in India and failing in Asia and failing in the US give you no head-start to succeed in Europe!
Finally, Worldspace, Liberty, and Sirius all had a chance and blew it completely and repeatedly in this business and in every other businesses in Europe. DON’T FALL FOR IT AGAIN. I Have 200,000 reasons why SIRI should first make the US market work!!!!!!!! PLEASE, Mel, John, whatever you do, at this crucial point where SIRI may finally make it, DON’T screw it all up and try to go to Europe where you have no idea whatsoever what you are doing.
So – asm610 – what is your real motivation?? Do you trade any of these stocks? Or are you lurking?
Roger,
you are more than funny. My motivation is getting information out there. I don’t trade..but I do own quite a few shares of SIRI. Been fighting all the basher nonsense for over a year. I think you have the ONdas start date incorrect as well…they don’t even launch their first SAT till 2011. Been long this stock since 2004, and was smart enough after the merger to not just sit and watch it fall…but avg down so I could eventually take a green seat earlier. Let me flip that Q on you…what is your motivation. You post alot of comments….but no backing info.
ALso ..the military L band was an issue for the Caribbean and South America…where Afristar 2 was originally to launch…why it didn’t, and why it sits in storage in France.