As the rest of the direct-broadcast satellite industry is
riding the high of record growth, the sense of uncertainty that has surrounded PrimeStar
Inc. for more than one year persists.
Even a deal announced early this year to sell most of
PrimeStar's assets to market-leader DirecTV Inc. has failed to bring about a
much-needed sense of conclusion to PrimeStar employees.
Sources said employees at PrimeStar's Englewood,
Colo., headquarters had been told that they would learn details about their fate with the
company by the end of February, but they now don't expect to hear until late March,
at the earliest.
PrimeStar and DirecTV were expected to ask a certain number
of PrimeStar employees to stay to help run the operations for a transition period of as
long as two years.
It was unclear whether the delay in employee notification
was tied to a possible holdup in the closing of the DirecTV deal. DBS market competitor
EchoStar Communications Corp. seems to be doing all that it can to put the brakes on the
asset acquisition.
Earlier this month, EchoStar filed comments with the
Federal Communications Commission, asking the FCC to deny the license transfer of 11 DBS
transponders at the 119 degrees west orbital-longitude location to DirecTV.
EchoStar holds the remaining 21 transponders at 119, and
last month, it sent a letter to PrimeStar stating that it intends to outbid DirecTV by
$100 million for the spectrum.
In its petition to the FCC, EchoStar argued that the
government should not allow a single DBS operator to use spectrum at all three full-CONUS
(continental United States) locations because it was less efficient than having operators
use spectrum at two adjacent slots.
PrimeStar's bondholders also threatened to delay the
DirecTV deal. PrimeStar extended until today (March 15) an offer to buy back its senior
secured notes.
At press time, sources could not confirm whether
bondholders called off their threats to file a lawsuit last week, or whether PrimeStar had
come through with additional cash to buy back the bonds at more than 67 cents on the
dollar.
Talk of lawsuits against PrimeStar was not limited to
bondholders last week. In investor chat rooms for TCI Satellite Entertainment Inc. (TSAT),
of which PrimeStar is a subsidiary, former employees sought feedback over the possibility
of suing TSAT over the mishandling of a retirement fund.
Before publicly traded TSAT rolled its assets into
PrimeStar, TSAT employees who participated in the company's 401K fund had only one
option to invest in: TSAT stock, which once traded at $8 per share, but which is now
trading at less than $1.
Some chat-room investors last week were hanging their hopes
on rumors that TSAT would evolve into a new company backed by the recent windfall that
Tele-Communications Inc. chairman and CEO John Malone saw from TCI's sale to AT&T
Corp.
