Hughes Solidifies PanAmSat, DirecTV Sat Deals

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Sep 8, 2003
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Space Systems/Loral, the satellite manufacturing subsidiary of Loral Space and Communications, said PanAmSat authorized the company to design and construct a new satellite, an expected move that's part of Hughes' effort to keep construction of satellites for PanAmSat and DirecTV on track.

Revenue for the construction of the satellite will be in excess of $100 million, SS/L said. In addition, PanAmSat agreed to enter into an option for an in-orbit spare for one of its existing satellites on terms and conditions that still need to be worked out between the companies.

The PanAmSat deal is for the Galaxy 16 program, a C-Band and Ku-Band satellite with 48 transponders. The spacecraft will be delivered in December 2005.

At the same time, Hughes Electronics, majority owner of PanAmSat and parent of DirecTV, notified Loral that contracts for two satellites previously issued to SS/L by DirecTV are now fully enforceable and binding, SS/L said. Hughes said DirecTV will make advance payments of $25 million on each of the two satellite orders, and PanAmSat will make an advance payment of $25 million on its new satellite order, for a combined total advance of $75 million, the satellite manufacturer said.

Proceeding with the construction of the satellite for PanAmSat and two satellites for DirecTV is subject to approval from the bankruptcy court considering Loral's case. A hearing on the matter is scheduled for Oct. 21.

EchoStar, DirecTV's main competitor in the satellite TV business, has been pursuing the DirecTV satellite orders through the bankruptcy process. EchoStar has said bankruptcy laws and procedures allow for the sale of a satellite in the factory at the time of bankruptcy to the highest bidder, which compelled the EchoStar bid for the assets being built for its small dish rival
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