When XM did their deal with WRSP during their IPO, a number of us did quite a bit of DD into the company and didn't like what we saw at all. I'd stay far away from it; very far.
A little history about XM and WorldSpace...
"American Mobile Satellite" was founded in 1988. In 1992, they created a subsidiary known as "American Mobile Radio", and brought in a partner known as WorldSpace - so that they could license their technology which was already being advanced in Africa for "free" satellite radio service for the poor countries. "American Mobile Satellite" held most of the new subsidiary - about 80% - while WorldSpace held 20%.
In 1997, American Mobile Radio was granted a license for SDARS by the FCC.
In October 1998, "American Mobile Satellite" changed the name of their subsidiary, American Mobile Radio, to "XM Radio".
In June 1999, following an American bombing of an African factory - which was owned by an investor in WorldSpace - it was feared that the US government would make it difficult on XM. So WorldSpace was encouraged to sell out their interest in XM back to "American Mobile Satellite". In return for selling their stake, XM had to give WorldSpace rights to enough of XM's spectrum to program 4 music channels on the XM system; plus it also held Patents that were very important to the early XM system -- thus they received lucrative licensing fees from XM for the rights.
Meanwhile, XM again became a wholly owned subsidiary of "American Mobile Satellite". At the same time, "XM received a $250 million investment commitment by industry leaders DIRECTV, Clear Channel Communications and General Motors Corporation, along with financial investors Telcom Ventures L.L.C., Columbia Capital and Madison Dearborn Partners." It was becoming more and more independent from 1 or 2 owners.
In October 1999, with the announcement of the new investors, American Mobile Satellite takes XM Radio public. A short time later, American Mobile Satellite changes their name to Motient.
In November 2001, while in bankruptcy proceedings -- Motient settled its $93 million in senior debt, by selling off its remaining stake in XM. They did this by "transferring it to its senior lenders -- Hughes Electronics, Singapore Telecommunications and Baron Capital Partners -- all of its remaining holdings, about 9.3 million shares in the Washington satellite radio company to satisfy its outstanding senior debt." This left no "major" holder of XM equity.
Re-enter WorldSpace...
In 2005, in connection to the WorldSpace IPO -- XM and WRSP re-worked their deal. In return for XM investing $25MM into the WRSP IPO -- WRSP terminated the obligation for XM to supply WRSP the satellite spectrum for 4 music channels. Although XM will continue to give them 2 channels worth of space, they were no longer obligated to do it. Furthermore XM paid WRSP for this programming. WRSP also granted XM a "royalty-free" right to the improvements that XM had made to the early WRSP patents. Gary Parsons was also added to the WRSP Board.
A short couple years later -- Parsons resigned from their Board to focus on XM; WorldSpace has since gone bankrupt; they recently unplugged the programming they were supplying XM... and XM's $25MM investment is gone... but so is its obligation to supply WRSP with 200Kbps of bandwidth and all of its Patent licensing. XM essentially bought their way out of WRSP' grasps for $25MM.
~~~~~~~~~~~~~~
Noah A. Samara's dream of free satellite for Africa has failed. He tried to turn it into a pay version, like XM and Sirius -- however you are not dealing with 1 country over there.
There are dozens of licenses needed for multiple countries (who all have opinions and restrictions) and multiple satellites needed... one for Africa, one for Asia and one for Europe. The Asia satellite is 9 years old; the Europe satellite was never launched, due to licensing issues; and the Africa satellite is already 11 years old too, so you're looking at replacing it soon. The Asia satellite also has issues as it tries to deal with China for expansion there, which will likely never happen. And then Japan's DARS allocation is on a completely different portion of the radio spectrum (S-Band, like XM and Sirius... WRSP is in the L-Band, I believe).
There are too many issues that I don't even want to get in to -- it's best to stear far away. Which is why I was never a proponent of buying WRSP at the time.
------------
SIRIUS XM SATELLITE RADIO FORUM
Reply With Quote
Originally Posted by homer985
