PANAMSAT AND ORBITAL SCIENCES SIGN $160 MILLION DEAL
PanAmSat announced Mon. it had signed agreement with Orbital Sciences to develop 3 next-generation Galaxy cable satellites at cost industry source estimated at $160 million. Deal appears to be change in standard operating procedure for PanAmSat, which formerly favored larger, more powerful geostationary satellites. Company said it would use smaller satellites for premier entertainment companies and Galaxy anchor customers, including ABC Cable Networks, ESPN, HBO, TBS and additional PanAmSat video services in N. America.
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Agreement is major boost for Orbital Sciences, which is attempting to bolster sagging satellite manufacturing business by attracting higher profile clients. Deal is its first geostationary contract since it was primary contractor for NTT Mobile Communications Network in late 1999. Company has made no secret in recent weeks that it was counting on manufacturing business to strengthen competitive position in industry and improve bottom line. “This is a major endorsement from a blue- chip” customer, Orbital CEO David Thompson said.
Procurement plan calls for Orbital Sciences to begin construction on one spacecraft designed to operate at 74 degrees W, PanAmSat said. Following launch in late 2002 or early 2003, expansion satellite will be equipped with 24 C-band transponders for delivery of full-time video services. PanAmSat also holds option for 2 more satellites that would succeed Galaxy 5 and Galaxy 1R cable neighborhoods following their scheduled retirements in 2005 and 2006. New satellite also would be equipped with 24 C-band transponders that would deliver content to 11,000 cable headends in U.S. If built, other satellites would “probably be completed by 2004,” PanAmSat official said. Birds are first built by Orbital to serve N. America, Thompson said.
PanAmSat Pres. Douglas Kahn called smaller satellites “ideal match” for broadcast services that company provides. He said agreement would enable PanAmSat to “fulfill the long-term needs of our anchor tenants” in Galaxy cable neighborhood as well as many other top-name programmers. Kahn said he believed new satellites would give PanAmSat additional resources to “continue building networks and developing new services for the delivery of traditional media as well as emerging applications.” Thompson said deal “solidifies our place” as one of top global suppliers of GEO satellites and “validates our strategy, carving out a solid niche in the market with an alternative to the larger, more costly systems.
Until now, PanAmSat had used larger satellites to provide service. Officials wouldn’t disclose why they opted to switch to Orbital after developing long-term relationships with Boeing Satellite Systems and Loral. Industry source said smaller satellites were “considerably less expensive” and could be able to serve needs of PanAmSat “just as well.” PanAmSat owns fleet of 20 satellites, each equipped with dozens of transponders. Most of spacecraft are based on 601 and 702 models built by Boeing. It also owns smaller Boeing 376 that’s similar to Orbital Star 1 satellite being constructed for PanAmSat. Since 1996, Boeing had been lone contractor building satellites for PanAmSat.