SES AMERICOM CEO Ed Horowitz was the guest speaker at the Washington Space Business Roundtable's Flagship Lunch and Silent Auction on Tuesday, 20 February 2007.

We don't have a podcast or video available, so here's the text of the speech:

“What’s Next?”

I appreciate this chance to speak with you today in this beautiful new facility. Not long ago, as many of you remember, this spot was part of a run down community --- which has obviously been brought back to life.

It’s changed.

And --- in the midst of the good change around us, I feel it is appropriate to ask, “What’s Next” for our  business and for us?

Where will we be in 20 years?

Will we be in 20 years?

I subscribe to Stanford’s “Growth Theory” economist Paul Romer’s view that growth occurs whenever people take resources and rearrange them in ways that are more valuable”.

To know what is “more valuable” is a matter of vision.

At the Twenty-second Communist Party Congress in 1961, Soviet Premier Nikita
Khrushchev’s vision was that within 20 years the Soviet Union would out-produce the United States in all the traditional sectors of industrial might --- coal, steel, cement, fertilizer and so on.

In 1981, that vision was indeed fulfilled: that year the Soviet Union outdid America in every one of those industries.

They successfully reproduced a late 19th, century manufacturing based industrial economy…while the US was inventing a 21st Century chip, computer and information based economy.

A new world happened, shaped by a furious and unplanned burst of technological, cultural and economic force. 

The Soviet vision of the future was as over-confident, but more importantly it was simply --- over.

Nikita Khrushchev saw the future through the wrong end of a telescope where the moment seemed larger than it was --- and the horizon smaller. He believed he could outwit history with a good plan built on dedicated incrementalism which had one gear --- sideways.

As we meet today and at other conferences persistently speaking ---to each other ---my fear is that we might be inclined to use Nikita’s telescope to envision what’s next for us.

The satellite industry, including SES, has dictated broad global changes in other businesses from entertainment to defense; from detection and GPS to secure communication.

Today, the satellite business is producing reliable earnings for our shareholders. But undeniably, there are changes on the horizon dictated, if nothing else, by the changing worlds of our customers.... And they expect us to “get it”. They expect us to anticipate needs.

What the future holds is an exciting mystery. But, we are better off addressing possibilities while we have a chance to invest in them; to own them ----rather than to ignore or possibly be displaced by them. That’s what we will talk about today.

What we know is that the future will be vastly different.

It is estimated that within the next 25 years, science and technology will advance by a factor of 4 – 7x beyond the advancements over the last 25 years.

While we may hear this in stride --- it is absolutely stunning in its business and social implications.

It means that where we stand today on the technology and science scale versus where we will be in the next 25 years --- is a moment equivalent to being in the year 1650.

Think about it …1650!

Of course the 25 years from 1650 – 1675 saw their own dramatic developments. The English started drinking tea. Cromwell dissolved Parliament, and the first bank note was issued in Sweden.

During this time the world population expanded to 500 million, which is about one-third the size of India today.

Isaac Newton began experiments with gravity and Cheddar Cheese was invented.

The great Plague of London commenced and the English settled in Charlestown, Virginia.

Ice cream was invented and La Grand Vetel, a famous French chef killed himself because Louis the 14th didn’t like the dinner La Grand had prepared.

You could say a lot happened in those 25 Years…But, the world had seen nothing yet.

1650 was 225 years before the phone was invented and…a century and a half before the ratification of the US Constitution.

It was 200 years before Edison was born.  It was 200 years before the US population would reach 23 million and China’s population then --- was almost the same number as China Mobile’s cellular customers today (about 350 million).

1650 was 307 years before Sputnik and 315 years before the first satellite.

We are all familiar with the advances made in the satellite industry through compression. Well, get ready for the advances in history made by an unprecedented compression of knowledge in the next 25 years.

We’re about to enter “The Great Compression”.

We are looking at the equivalent change of the last 315 years --- about to be compressed into the next 25 years.

What does this mean?

It means --- for example --- that if you are in the transportation business --- the worst four words you could imagine for your business --- may actually be heard in the next 25 years…The four words? --- “Beam me up Scotty”.

The odds that the massive changes coming in the “Great Compression” will leave the satellite industry untouched --- are zero. Change will come to us whatever we choose to do or not to do.

What will we be doing when it comes?

While technology is a “business”, it is also a force not to be controlled even by the best of intentions.

The genie is out of the bottle and the question is whether the genie is working for us or are we working for the genie?

Let’s spend a little time today on some broad issues of concern to our industry and to our customers:

1. U.S. Government business…

2. The commercial and media business…

3. The ramifications of change in both worlds and lastly …

4. I want to discuss a looming talent deficit as we face the  coming “Great Compression”.

The US government business is, as you all know, changing rapidly. Saddam Hussein invaded Kuwait in August, 1990 and the US and Coalition forces liberated it in January of 1991.

During the 5 ½ months between Hussein’s invasion and ours, the American military was caught without the satellite capacity to track and mount the offensive.

They scrambled to acquire the needed transponders and didn’t have time for emergency appropriations to acquire them, so the costs were guaranteed ---- by Private Citizen Ted Turner.

It was no coincidence that Turner’s CNN had the best and for a time the only video from Desert Storm.

The US military will never be caught like that again. Six months after our troops landed, DISA was created to make sure it wouldn’t happen again.

In the intervening years between Desert Storm and 9/11, the US military changed. 

When 9/11 came, the military was ready with a system in place to fund $78 million dollars worth of contracts to provide the satellite and communications services needed. The contracts were in large part for bundled solutions in addition to the broadband commodity.

We learned then that in the future we need to leverage what only satellites can provide --- advanced mobile communications and high speed internet access --- while on the move ----anywhere in the world --- via aircraft, boat, humvee or on foot.

What the military needs is megabytes, not megahertz. The military expects a ground and mobile capacity consistently capable of facial recognition.

Increasingly, the US government wants net-centric bundled solutions as well as broadband and they are calling upon us to be creative about it.

There is a demand for specific megabyte capacity per war fighter and we also know that this demand will only grow over time.

Increasing our military business means persistently increasing capacity and solutions.

For example, there is an ever expanding need for video teleconference capability (VTC) --- for commanders in the field, in Washington, and for soldiers on the ground.

The invasion of Iraq was witnessed live on multiple screens in the White House Situation Room. Decisions could be made in real time with real data. Before that it was almost like Abraham Lincoln waiting for a telegram telling him that Grant had taken Richmond.

Soldiers on the ground also have growing “human terrain” needs in addition to VTC --- also things like  IM and secure chat capability.

Remember, in five years … 50% of the military will be Gen X and Y. They grew up in a digital world. The military has to grow with them – and so do we.

Whenever we speak of high speed mobile communications we must, in the same breath, speak of advanced development of “in-orbit” flexibility and new antennae development.

Satellites must increasingly have capabilities for re-direction and re-programming in space.

We must advance efforts to change frequencies and footprints in orbit.

We look over our shoulders for our competitors and can’t see some of them because they’re in front of us. They may not even be in our business.

For example, let’s look for a moment at the world of Nano-technology, once viewed as science fiction, but today may represent the “key enabling technology” of the 21st century.

Nano- technology is the “purposeful creation, manipulation and use of matter, physical structures and engineered devices with previously unimaginable dimensions”.

Nano-technology is starting to impact chemistry, biology, applied physics and medicine. The inevitable applications to the space and satellite world are just beginning to be imagined.

But, one way to think of it, knowing that a nanometer is one billionth of a meter, is to see every person as a nano-unit in a world with six billion people. That is the level of services and connection we must contemplate.

What are some of the ramifications of these great changes for our customers and for our business?

One ramification could be friction with our current customers and we have to think about that.

Many of our major customers are in the commercial media world --- where things are also changing at a furious pace.

You Tube, MP3, file sharing and a host of  other technological and social changes are threatening old business models like “Beam me up Scotty” would threaten transportation.

Our media customers are losing control of their customers who are increasingly less dependent on mass packaged media which we reliably deliver.

User generated and niche media (nano media) are replacing mass media.

Remember the 1998 Jim Carrey movie, “The Truman Show” where an unsuspecting insurance salesman’s life was made into a 24/7 movie for the entertainment of the town’s people?

Everyone in his fabricated town, his mother included, made a fool of him everyday --- in their controlled entertainment world.

It was all run out of a network studio from which Truman eventually escaped-- heartbroken.

Now think of The Truman Show in reverse where the insurance salesman watches everyone and anyone all day and all night, as he chooses.

Imagine control gone from the entertainment business into the hands of Truman… and the walls of the entertainment and media world come tumbling down.

That’s where we’re headed --- along with our customers. User generated content and demand is going to turn the media world upside down.

Control will shift and it will be a new challenge to make an honest buck for the old institutions.

What is the response of the media and entertainment business to this creative destruction threat?

A recent book called “Wikinomics” – gives one example of how the media world is responding in the field of music… and I quote:

“Rather than embracing MP3 and adopting new business models, the industry has adopted a defensive posture. Obsession with control, piracy, and proprietary standards on the part of large industry players has only served to further alienate and anger music listeners…If your invention can be replicated at no cost, why should anyone pay?...Today a new economic model of intellectual property is prevailing”.

What is our response?

In the commercial and media world, let’s look at two business prospects on extreme ends of the continuum.

On one end, is the real prospect for business in the under and un-developed world. Half the world does not participate in the global economy in any way shape or form.

The developed world is increasingly understanding the value of changing this through governmental, private and NGO enterprises. It is not strictly a charitable exercise but a way to grow demand and markets.

The economy cannot be called global until this succeeds on a much greater scale. Central to these prospects are enterprises within our expertise. The sooner undeveloped countries have access to the information and communication revolution which, in many ways we can steer, the sooner there will be unprecedented growth and demand not evident in mature economies.

An example of how we extend the reach into being  called “truly global” may be characterized by SES’ support of One Laptop Per Child (OLPC) Initiative.

OLPC is designed to put into the hands of children around the world the capacity of accessing information and connectivity with others ranging from people in their village or nearby villages, anywhere in their country and potentially around the world.

On the other end of the continuum are the possibilities in the media world with the disruption of old models.

But before we go any further, let’s make something clear. When we say “user generated content” we all think of You Tube or something like it. But You Tube makes no money and never has --- except for its original creators who profited handsomely when they sold to Google. 

When Google purchased You Tube and was asked how they intended to monetize it, the answer was: “we’ll figure that out later.”

Let’s be honest. You tube content is dominated by really, really bad material ---and the most frequently viewed material inclines toward quality production and content.

But, as you have seen, Viacom is now demanding that You Tube remove all of its Viacom material. Others will surely follow. And You Tube’s offerings will begin to diminish.

Then there is Current TV, Vice President Gore’s effort, which is totally user-generated content. But it’s still part of the standard Dish and cable mass media package.

It’s user-generated content but it’s still part of the old business model for the system providers.

From our point of view, the revolution may have little to do with user generated content and everything to do with user “dictated” content.

I’m talking about free enterprise --- for real.

Very recently, an outfit called Virtual Digital Cable in Illinois, has started a service to deliver cable programming without cable --- by using only the internet.  No trench digging or coaxial cable or fibre placement… no local franchise or fees. Naturally,
the legal challenges to VDC are blocks long but the point is Disruption for our customers and for us --- is inevitable.

Product development and innovative bundled Solutions like IP Prime are important targets. But how do we most effectively and most profitably adapt to the new net-centric content world?

One answer is to consider what I called “My Geosynchronous Media” but someone told me that MGM was taken. Then I tried “My TV” but of course, MTV was taken. So for now let’s just call it “My TV Station”.  “MTVS”

MTVS is a niche media for one; a nano niche.

It is the creation of a net-centric and net- neutral, trusted third party content aggregator designed as “My TV Station” which runs exactly what you want, when you want it on whatever device you choose.

The customer pays only for the exact content they want… whether it’s sports or Friends re-runs, all CSI or whatever. MTVS delivers it and pays the content provider --- as a trusted 3rd party must.

Unlike cable and traditional satellite mass programming where you pay for things you never watch, MTVS gathers exactly and only what one person wants to watch when they want to watch it.

This direction means we would become a “Relationship Management” business in addition to our conventional business.

It also means we would, to an unavoidable extent, be in competition with our current customers.

Does that matter? Of course it does. But, these are the kinds of questions we need to face now before it’s too late to do anything about it.

My last issue is “People”. Are the Human resources and talent out there? Can we keep what we have and get what we need? What about the Demographic Wall?

Business Week Magazine recently advised new professionals to stay away from the space business because it offered “no future”. The engineering and science expertise that is the fundament of our industry is aging and this means on one hand that many are near retirement with a thin bench of possible replacement.

On the other hand, those who choose to stay in the business, and we need them desperately,  are making it hard for new people we do attract to move up ---- and also difficult to make change.

The truth is that as we move forward, this is not your “Father’s Satellite” world.

When it comes to attracting talent, you could say, we have an image problem natural to a maturing industry and …we have an advancement opportunity problem for the ambitious new engineer we do attract.

It is the science and invention that makes us grow. There is a clear shortage on the horizon.  It is also true that as an industry, we have very poor public communication and we tell no exciting stories which we need to attract talent.

Just as the American military will be 50% composed of X and Y Gen soldiers who grew up in a digital world, my fondest hope for our industry is that we can say the same. If we can’t –then the future will be a lot harder to face.

I have shared some things to think about with you today and I appreciate your listening to them. I’m glad to hear your ideas as well --- any time.

But for now, I see my time is up so I guess all I can say is Thank You and…“Beam Me Up --- Frank ”.

Thank you very much.

They've been talking about it for a while, and we blogged how you can have both Sirius and XM integrated in your car. It got real today.

This morning, the New York Post, America's oldest continuously published daily newspaper, got the scoop:

HEAVENLY DEAL

By PETER LAURIA

February 19, 2007 -- Satellite radio operators Sirius and XM are expected to announce their long-awaited merger today, according to a source familiar with the deal.

The two sides were locked in negotiations over the weekend trying to hammer out a final agreement with an eye toward going public with the merger today in Washington, D.C., where XM is based, this source said.

Talks were still going on at press time and the deal could fall apart at any time. With antitrust issues of paramount importance, this source said lawyers for both companies were working overtime to fine-tune the language of the agreement and frame the discussion around the deal itself and not regulatory concerns.

The transaction is expected to be structured as a merger of equals, but given Sirius' higher enterprise value, shareholders in the Mel Karmazin-led firm will likely come away with a larger percentage of a combined company.

According to the source, XM Chairman Gary Parsons will retain that title in the combined entity, with Karmazin likely taking the CEO role. It is unclear what role, if any, XM CEO Hugh Panero will play.

Combining Sirius and XM would result in a single satellite radio operator with more than 12 million total subscribers. A deal would also marry Sirius content, such as Howard Stern, Frank Sinatra and Nascar with XM's Oprah Winfrey, Bob Dylan and Major League Baseball.

More important, analysts widely predict that a deal would also save the two companies nearly $7 billion annually.

Karmazin and Parsons have been dropping hints since last summer about a possible tie-up, believing that competition from terrestrial radio, online radio and mobile music devices such as iPods have not only expanded the marketplace but also lowered the regulatory hurdles to a deal.

In a note on Friday, Bear Stearns analyst Robert Peck speculated that Sirius and XM needed to move quickly before their window of opportunity closed.

Gaining regulatory approval "could take up to 15 months; hence, we think any proposed deal needs to be announced by the end of March to close by mid-2008," Peck wrote.

On Friday, XM shares hit their lowest point since early November while Sirius shares were approaching 52-week lows. Shares in both companies did trade on heavy volume and ended the session higher, with Sirius gaining 10 cents to close at $3.70 and XM jumping a dollar to $13.98.

 Later this afternoon, it became official: a merger of equals? That's what they said about Daimler and Chrysler. Here's the press release:

SIRIUS and XM to Combine in $13 Billion Merger of Equals
Provides Consumers with Enhanced Content, Greater Choices and Accelerated Technological Innovation

Enables Satellite Radio to Better Compete in Rapidly Evolving Audio Entertainment Industry

Extraordinary Value Creation for Shareholders

Mel Karmazin to Serve as Chief Executive Officer and Gary Parsons to Serve as Chairman of Combined Company

WASHINGTON and NEW YORK, Feb. 19 /PRNewswire-FirstCall/ -- XM Satellite Radio (NASDAQ: XMSR) and SIRIUS Satellite Radio (NASDAQ: SIRI) today announced that they have entered into a definitive agreement, under which the companies will be combined in a tax-free, all-stock merger of equals with a combined enterprise value of approximately $13 billion, which includes net debt of approximately $1.6 billion.

Under the terms of the agreement, XM shareholders will receive a fixed exchange ratio of 4.6 shares of SIRIUS common stock for each share of XM they own. XM and SIRIUS shareholders will each own approximately 50 percent of the combined company.

Mel Karmazin, currently Chief Executive Officer of SIRIUS, will become Chief Executive Officer of the combined company and Gary Parsons, currently Chairman of XM, will become Chairman of the combined company. The new company's board of directors will consist of 12 directors, including Messrs. Karmazin and Parsons, four independent members designated by each company, as well as one representative from each of General Motors and American Honda. Hugh Panero, the Chief Executive Officer of XM, will continue in his current role until the anticipated close of the merger.

The combined company will benefit from a highly experienced management team from both companies with extensive industry knowledge in radio, media, consumer electronics, OEM engineering and technology. Further management appointments will be announced prior to closing. The companies will continue to operate independently until the transaction is completed and will work together to determine the combined company's corporate name and headquarters location prior to closing.

The combination creates a nationwide audio entertainment provider with combined 2006 revenues of approximately $1.5 billion based on analysts' consensus estimates. Today the companies have approximately 14 million combined subscribers. Together, SIRIUS and XM will create a stronger platform for future innovation within the audio entertainment industry and will provide significant benefits to all constituencies, including:

  * Greater Programming and Content Choices -- The combined company is committed to consumer choice, including offering consumers the ability to pick and choose the channels and content they want on a more a la carte basis. The combined company will also provide consumers with a broader selection of content, including a wide range of commercial-free music channels, exclusive and non-exclusive  sports coverage, news, talk, and entertainment programming.  Together, XM and SIRIUS will be
able to improve on products such as real-time traffic and rear-seat
video and introduce new ones such as advanced data services including enhanced traffic, weather and infotainment offerings.

  * Accelerated Technological Innovation -- The merger will enable the combined company to develop and introduce a wider range of lower cost, easy-to-use, and multi-functional devices through efficiencies in chip set and radio design and procurement.  Such innovation is essential to remaining competitive in the consumer electronics-driven world of audio entertainment.

  * Benefits to OEM and Retail Partners -- The combined company will offer automakers and retailers the opportunity to provide a broader content offering to their customers.  Consumer electronics retailers, including Best Buy, Circuit City, RadioShack, Wal-Mart and others, will benefit from enhanced product offerings that should allow satellite radio to compete more effectively.

  * Enhanced Financial Performance -- This transaction will enhance the long-term financial success of satellite radio by allowing the combined company to better manage its costs through sales and marketing and subscriber acquisition efficiencies, satellite fleet synergies, combined R&D and other benefits from economies of scale.  Wall Street equity analysts have published estimates of the present value of cost synergies ranging from $3 billion to $7 billion.

  * More Competitive Audio Entertainment Provider -- The combination of an enhanced programming lineup with improved technology, distribution and financials will better position satellite radio to compete for consumers' attention and entertainment dollars against a host of products and services in the highly competitive and rapidly evolving audio entertainment marketplace.  In addition to existing competition from free "over-the-air" AM and FM radio as well as iPods and mobile phone streaming, satellite radio will face new challenges from the rapid growth of HD Radio, Internet radio and next generation wireless technologies.

"We are excited for the many opportunities that an XM and SIRIUS combination will provide consumers," said Gary Parsons, Chairman of XM Satellite Radio and Hugh Panero, CEO of XM Satellite Radio, in a joint statement. "The combined company will be better positioned to compete effectively with the continually expanding array of entertainment alternatives that consumers have embraced since the Federal Communications Commission (FCC) first granted our satellite radio licenses a decade ago."

"This combination is the next logical step in the evolution of audio entertainment," said Mel Karmazin, CEO of SIRIUS Satellite Radio. "Together, our best-in-class management team and programming content will create unprecedented choice for consumers, while creating long-term value for shareholders of both companies. The combined company will be positioned to capitalize on SIRIUS and XM's complementary distribution and licensing agreements to enhance availability of satellite radios, offer expanded content to subscribers, drive increased advertising revenue and reduce expenses. Each of our companies has a strong commitment to providing listeners the broadest range of music, news, sports and entertainment and the best customer service possible. We look forward to sharing the benefits of the exciting new growth opportunities this combination will provide with all of our stakeholders."

The transaction is subject to approval by both companies' shareholders, the satisfaction of customary closing conditions and regulatory review and approvals, including antitrust agencies and the FCC. Pending regulatory approval, the companies expect the transaction to be completed by the end of 2007.

SIRIUS's financial advisor on the transaction is Morgan Stanley and Simpson Thacher & Bartlett LLP and Wiley Rein LLP are acting as legal counsel. XM's financial advisor on the transaction is J.P. Morgan Securities Inc. and Skadden Arps, Slate, Meagher & Flom LLP; Jones Day; and Latham & Watkins LLP are acting as legal counsel.

I remember when the FCC first authorized both satellite radio service. One stipulation was that receivers be able work with both services.

Personally, I chose Sirius because I think they have better satellites in orbit. The FS-1300 bus, built by Space Systems/Loral, has a long history of reliability. XM's satellites, the Boeing 702, are technological marvels -- but they've had some power problems.

Tuesday's webcast ought to be good. The approval process is going to be quite a show -- the NAB has already objected. Since both license terrestrial spectrum to fill in the gap in larger cities, expect every broadcaster to chime in on this one. I can see additional competion coming from digital television radio, too.

Reuters reports:

European satellite company SES (SESF.LU: Quote, Profile , Research) (SESFd.PA: Quote, Profile , Research) said on Wednesday it had agreed to buy back a 19.5 percent stake in the company from General Electric (GE.N: Quote, Profile , Research) in a deal worth 1.24 billion euros ($1.62 billion).

SES shares shot up to an 11-month high of 14.80 euros and were up 6.4 percent at 14.50 euros at 1600 GMT, with investors relieved of the prospect of GE releasing shares onto the market.

"SES will contribute certain assets and cash to a new company and exchange shares of that new company for GE's entire holding of 103,149,900 shares in SES," the company said in a statement of a deal it expected to boost earnings.

In a presentation, SES said it expected its earnings per share to rise by over 13 percent in 2007.

SES Chief Financial Officer Mark Rigolle described the deal as "made in heaven" by removing the overhang of GE's holding that has been depressing SES shares and by restructuring SES's portfolio after its 2005 acquisition of New Skies.

SES, one of the world's largest commercial satellite operators, said it would pay the equivalent of 12 euros for each exchanged share, resulting in a total transaction value of 1.238 billion euros.

This could rise by 45 million euros depending on the closing date. SES said the deal was expected to close in the second quarter of 2007.

GE took the stake in 2001 when SES bought GE's satellite business Americom.

KBC Securities said in a research note that the valuation of the assets appeared fair, and the disposal of certain assets made sense, with some overlap following SES's purchase in 2005 of New Skies.

"The transaction should be earnings accretive, will increase financial leverage and bring the free float up to 70 percent," KBC said.

In the credit derivatives market, the cost of insuring SES debt against default edged higher, up 2 basis points to 30.5 basis points, a trader said, on fears that the deal could make the company more attractive in a leveraged buyout.

GE will swap its SES shares for shares in the new company, SES International Holding Inc, comprising assets including one satellite, a variety of stakes in related businesses and 588 million euros in cash.

SES will seek to cancel some 86 million of the 103 million C shares it buys back and convert the remainder to FDRs to pay B-shareholders.

CFO Rigolle said the deal would simplify the shareholding structure, with the cancellation of around one in five of its shares.

SES also set new revenue and core earnings (EBITDA) guidance for 2007 to reflect the GE transaction. It sees revenues of 1.568 billion to 1.608 billion euros and EBITDA of 1.041 to 1.081 billion euros.

SES agreed to buy New Skies in December 2005 to boost its presence in Latin America and the Indian Ocean region.

Separately on Wednesday, Asia Satellite Telecommunications Holdings Ltd (1135.HK: Quote, Profile , Research) said its major shareholder Modernday Ltd planned to take the company private for $282 million. Modernday is jointly owned by CITIC and General Electric Capital Corp. (Additional reporting by Richard Barley in London)
 

Here's the official news release:

SES (Euronext Paris and Luxembourg Stock Exchange: SESG) announces that it has agreed with GE a EUR 1.2bn split-off transaction in which SES will contribute certain assets and cash to a new company and exchange shares of that new company for GE’s entire holding of 103,149,900 shares in SES, subject to satisfaction of certain closing conditions. As disclosed in March 2006, SES has been discussing with GE a number of options to achieve a structured exit from its remaining shareholding.

GE will exchange its shareholding in SES for shares in a new company, SES International Holdings, Inc. (“SIH”), comprising assets and EUR 588 million in cash, subject to certain closing adjustments. SES has agreed to pay an equivalent of EUR 12 for each exchanged share1, resulting in a total transaction value of EUR 1,238 million. The cash amount and the transaction value may be increased by approximately EUR 45 million depending on the closing date.

The assets of SIH will be:

• The AMC-23 satellite and its related business
•  100% of SATLYNX
•  49.5% of Bowenvale (representing a 34.1% interest in AsiaSat)
•  19.99% of Star One
•  5.5% of Orbcomm

Due to the intended US tax treatment of the transaction, third party valuations of the assets were secured.

The transaction announced today allows SES to achieve two important business objectives: to restructure and optimise SES’ portfolio of assets following the SES NEW SKIES acquisition and to remove the GE share overhang.

The acquisition of SES NEW SKIES in March 2006 added to the SES fleet five 100% owned satellites over Asia, Africa and Latin America (NSS-806, NSS-7, NSS-703, NSS-6 and NSS-5). These satellites are in addition to the spacecraft already owned through participations in AsiaSat and Star One, as well as the three other 100% owned assets (AMC-12/ASTRA 4A, AMC-23 and AAP-1), which have comparable coverage and serve similar business purposes to some of the NEW SKIES satellites. This created an opportunity to restructure and optimise SES’ business assets and portfolio of minority participations which led to the decision to divest from the shareholdings in AsiaSat and in Star One as well as to dispose of the AMC-23 satellite operated over the Pacific Ocean Region (POR).

With SES NEW SKIES generating most of its revenues in the government and enterprise infrastructure segment, SES has also re-evaluated the relevance of certain of its satellite end-to-end managed service activities in the enterprise market. As a result, SES decided to divest from SATLYNX, the group’s end-to-end managed service entity. There will now be an increased focus of the SES service business on media and government applications.

SES expects to derive significant corporate benefits from the transaction as it removes the GE overhang which had created the perception of a cap on the SES share price since the announcement that GE intended to divest its interest in SES.

The transaction is expected to close by Q2 2007 subject to the satisfaction of the closing conditions (which include, among others, receipt of certain approvals from SES’ shareholders, a tax ruling regarding the tax treatment of the transaction for GE, and required regulatory approvals).

An Extraordinary General Meeting will be scheduled for March 15th, 2007, in order to allow the Company to buy back all 103,149,900 C-shares, of which 85,958,250 will be canceled. As the B-shareholders have elected to be paid in FDRs in lieu of cash, the remaining 17,191,650 C-shares will be converted into FDRs in order to pay the B-shareholders for their 42,979,125 B-shares. As a result of the transaction, and while maintaining the number of B-shares at 1/3 of the total, the shareholder structure of SES will be simplified.

We read today in TVPredictions.com satellite TV operators may soon need to carry the Public Broadcasting Service's HDTV feeds:

Public Broadcasting officials say satellite TV operators should be required to carry their High-Definition signals.

PBS executives from across the country are coming to Washington this week to urge Congress to change the Communications Act to include a must-carry provision.

"DIRECTV and EchoStar use scarce public airwaves to beam their signals to and from satellites," says John Lawson, president and CEO of the Association of Public Television Stations (APTS). "They use highly valuable international orbital slots for these satellites. It's outrageous that they won't carry the new digital channels from local public stations, but find a way to carry the big four commercial network stations."

DIRECTV and EchoStar have expanded their local HD service over the last year, but do not offer the PBS high-def signal in most cities.

APTS says the Communications Act should state that the satcasters must carry PBS' "entire multicast digital programming," which would include the high-def signal and other digital feeds.

Satellite TV services are required to carry the analog feed of the local PBS station under the Satellite Home Viewer Improvement Act.

APTS says DIRECTV is considering carriage of PBS digital feeds, but talks are at an early stage. EchoStar, the group says, is refusing to carry the PBS digital feeds.

In January 2005, the PBS group signed an agreement with the National Cable and Telecommunications Association for carriage of all PBS digital signals on large cable TV systems. APTS says it hopes to sign a similar agreement with smaller cable systems in the near future.

The Association of Public Television Stations Web site gets into the details:

Specifically, APTS seeks to amend Section 338 of the Communications Act to make clear that the digital signals of Public Television stations are subject to the carry-one carry-all provisions related to carriage of local broadcast signals via satellite. This action would clarify that the entire multicast digital programming transmitted by a Public Television station is subject to mandatory carriage.

Gotta love Variety's witty headlines:

Public broadcasters lobby on carriage

Networks plea to Congress for satellite TV signal

By WILLIAM TRIPLETT

Local pubcasters are set to launch a lobbying blitz to convince Congress to mandate carriage of all their digital signals by satcasters DirecTV and EchoStar.

As the Assn. for Public Television Stations hosts its "Capitol Hill Day" this week, reps from local noncommercial broadcasters from around the country will converge on Congress to express their frustration that "the high-definition signals of commercial stations are carried by satellite distributors, while public television stations' new digital signals are kept off," according to an APTS statement.

They will therefore ask in the coming days that Congress support legislation requiring that DirecTV and EchoStar carry all local pubcasters' HD and other digital programming during the transition to all-digital TV and after it is completed in February 2009.

If you’re out in a truly remote location, especially at one of the poles, your options for connectivity are limited. First, it probably isn’t wired. Second, geosynchronous communications satellite orbit approximately 36,000 kilometers (22,300 miles) above the equator. This means that once you get to the extreme northern or southern latitudes, your options includes geo satcoms in inclined orbits and low-earth orbit satellites (LEOs). The two leaders in this field are Iridium and Globalstar.

Iridium had their financial troubles years ago and has since recovered, thanks in part to the U.S. Department of Defense. When Iridium went into bankruptcy, it was the DoD that realized they needed Iridium’s network for diversity. In this context, the word “diversity” means a diverse path of communications. Today, a restructured Iridium is holding its own.

Globalstar’s prospects have taken a turn for the worse, as we read in the Silicon Valley/San Jose Business Journal:

Globalstar Inc. said Tuesday its satellite amplifiers are wearing out faster than expected threatening its ability to support two-way communications by as early as 2008.
Milpitas-based Globalstar (NASDAQ:GSAT) said it is trying to launch its next generation of satellites in 2009. In a filing with the Securities and Exchange Commission, the company said that its amplifiers are degrading faster than expected, and it may not be able to fix the problem in time.
The problem may be linked to radiation exposure, Globalstar said.
Globalstar, which went public in November, saw its shares drop almost 26 percent to $10.75 in midday trading. The stock has traded between $12.45 and $17.68.

Concerned yet? Read their Form 8-K filing with the U.S. Securities and Exchange Commission (SEC) and you’ll find this:

As previously disclosed in the Company’s public filings, a number of its satellites have experienced various anomalies over time, one of which is a degradation in the performance of the solid-state power amplifiers of the S-band communications antenna.  The S-band antenna provides the downlink from the satellite to a subscriber’s phone or data terminal.  Degraded performance of the S-band antenna reduces the quality of two-way voice and data communication between the affected satellites and the subscriber and may reduce the duration of a call.  If the S-band antenna on a satellite ceases to function entirely, two-way communication is impossible over that satellite, but not necessarily over the constellation as a whole.  The root cause of the degradation in performance of the amplifiers is unknown, although the Company believes it may result from irradiation of the satellites in orbit.
The S-band antenna amplifier degradation does not affect adversely the Company’s one-way “Simplex” data transmission services, which utilize only the L-band uplink from a subscriber’s “Simplex” terminal to the satellites. 
To date, the Company has managed the degradation of the S-band antenna amplifiers in various technical ways, as well as by placing into service spare satellites already in orbit and moving unimpaired satellites to key orbital positions.  To maintain the highest possible capacity and best possible quality of service in light of this problem and to prepare for the integration of the eight satellites to be launched in 2007, on February 2, 2007, the Company completed the reconfiguration of its satellite constellation to combine two different “Walker” configurations, which continue to operate as a single constellation of 40 satellites plus in-orbit spares.  When launched, the eight satellites will be utilized to replenish the constellation over time as necessary until the second generation satellites are available for service, which the Company currently projects will be in late 2009. 

Fortunately, they’ll be using Inmarsat’s BGAN service at the upcoming Baffin Island expedition, along with Globalstar. Sir Richard Branson, his son Sam and Ed Viesturs will join the team on the last leg of the journey, from late April to the end of the expedition in May 2007.

Via Satellite has named Pat Dewitt, CEO of Space Systems/Loral, the Satellite Executive of the Year:

"We had to decide between a number of exceptional executives that lead their companies to new successes in 2006," said Jason Bates, editor of Via Satellite magazine. "However, what set Pat DeWitt apart from the rest was how quickly he turned the company around after such a difficult period. There was consensus at Via Satellite that this was the year to recognize Pat's achievements."

In 2006, under DeWitt's leadership, SS/L won a total of seven new satellite construction awards, from a wide array of customers, including Fixed Satellite Service (FSS), Mobile Satellite Service (MSS), Digital Audio Radio Service (DARS) and Direct-To-Home (DTH) service providers. The company also saw the successful launch of five SS/L-built satellites during the year.
 
"SS/L's success today is a result of the leadership and vision put forth by Pat DeWitt," said Michael Targoff, chief executive officer of Loral Space & Communications. "Pat led the company through a difficult period and has positioned the company as the world's premier provider of commercial satellites. Congratulations to Pat and all of SS/L on this well-deserved recognition."

Pat DeWitt has held management positions with SS/L and its predecessor companies for 34 years. He started at the company when it was Western Development Labs of Ford Aerospace in 1973, as a financial analyst, and was promoted to positions of increasing responsibility over the years. He was named executive vice president in 1996 and in that role was responsible for finance, information systems, procurement, facilities, and human resources. He became president of the company in 2001 and was named chief executive officer in 2006.

"It is a great honor to receive this award," said DeWitt. "I would like to extend my thanks to the editors of Via Satellite magazine as well as to the employees of Space Systems/Loral and most of all I want to thank our many loyal customers who are the ultimate reason for our success."

The award will be presented at SATELLITE 2007, the premier global event for satellite-enabled communications, which runs February 19-22 at the Washington Convention in Washington, D.C.

Friends, Earthlings, ETs -- lend me your sensory organs!

I send you greetings and good wishes at the beginning of another year. I’ll be celebrating (?) my 90th birthday in December – a few weeks after the Space Age completes its first half century.

When the late and unlamented Soviet Union launched Sputnik 1 on 4 October 1957, it took only about five minutes for the world to realise what had happened. And although I had been writing and speaking about space travel for years, the moment is still frozen in my own memory: I was in Barcelona attending the 8th International Astronautical Congress. We had retired to our hotel rooms after a busy day of presentations when the news broke -- I was awakened by reporters seeking comments on the Soviet feat. Our theories and speculations had become reality!

Notwithstanding the remarkable accomplishments during the past 50 years, I believe that the Golden Age of space travel is still ahead of us. Before the current decade is out, fee-paying passengers will be experiencing sub-orbital flights aboard privately funded passenger vehicles, built by a new generation of engineer-entrepreneurs with an unstoppable passion for space (I’m hoping I could still make such a journey myself). And over the next 50 years, thousands of people will gain access to the orbital realm – and then, to the Moon and beyond.

During 2006, I followed with interest the emergence of this new breed of ‘Citizen Astronauts’ and private space enterprise. I am very encouraged by the wide-spread acceptance of the Space Elevator, which can make space transport cheap and affordable to ordinary people. This daring engineering concept, which I popularised in The Fountains of Paradise (1978), is now taken very seriously, with space agencies and entrepreneurs investing money and effort in developing prototypes. A dozen of these parties competed for the NASA-sponsored, US$ 150,000 X Prize Cup which took place in October 2006 at the Las Cruces International Airport, New Mexico.

The Arthur Clarke Foundation continues to recognise and cheer-lead men and women who blaze new trails to space. A few days before the X Prize Cup competition, my old friend Walter Cronkite received the Foundation’s Lifetime Achievement Award. I have known Walter for over half a century, and my commentary with him during the heady days of the Apollo Moon landings now belong to another era. A space ‘pathfinder’ of the Twenty First Century, Bob Bigelow, was presented the Arthur C. Clarke Innovator Award for his work in the development of space habitats. With the successful launch of Bigelow Aerospace’s Genesis 1, Bob is leading the way for private individuals willing to advance space exploration with minimum reliance on government programmes.

Meanwhile, planning and fund raising work continued for the Arthur C. Clarke Center "to Investigate the Reach and Impact of Human
Imagination", to be set up in partnership with the University of Nevada, Las Vegas. Objective: to identify young people with robust imagination, to help their parents and teachers make the most of that talent, and to accord imagination as much regard as high academic grades in the classroom - anywhere in the world.  The Board members of the Clarke Foundation, led by its indefatigable Chairman Tedson Meyers, have taken on the challenge of raising US$ 70 million for this project. I’m hopeful that the billion dollar communications satellite industry I founded 60 years ago with my Wireless World  paper (October 1945), for which I received the astronomical sum of £15, will be partners in this endeavour.

I’ve only been able to make a few encouraging noises from the sidelines for these and other worthy projects as I’m now very limited in time and energy owing to Post Polio. But I’m happy to report that my health remains stable, and I’m in no discomfort or pain. Being completely wheel-chaired helps to concentrate on my reading and writing – which I can once again engage in, with the second cataract operation restoring my eyesight.

During the year, I wrote a number of short articles, book reviews and commentaries for a variety of print and online outlets. I also did a few carefully chosen media interviews, and filmed several video greetings to important scientific or literary gatherings in different parts of the world.

I was particularly glad to find a co-author to complete my last novel, The Last Theorem, which remained half-written for a couple of years. I had mapped out the entire story, but then found I didn’t have the energy to work on the balance text. Accomplished American writer Frederik Pohl has now taken up the challenge. Meanwhile, co-author Stephen Baxter has completed First-born, the third novel in our collaborative Time Odyssey series, to be published in 2007.

Members of my adopted family -- Hector, Valerie, Cherene, Tamara and Melinda Ekanayake -- are keeping well. Hector has been looking after me since 1956, and with his wife Valerie, has made a home for me at 25, Barnes Place, Colombo. Hector continued to rebuild the diving operation that was wiped out by the Indian Ocean Tsunami of December 2004. Sri Lanka’s tourist sector, still recovering from the mega-disaster, weathered a further crisis as the long-drawn civil conflict ignited again after more than three years of relative peace and quiet. I remain hopeful that a lasting solution would be worked out by the various national and international players engaged in the peace process.

I’m still missing and mourning my beloved Chihuahua Pepsi, who left us more than a year ago. I’ve just heard that dogs aren’t allowed in Heaven, so I’m not going there.

Brother Fred, Chris Howse, Angie Edwards and Navam Tambayah look after my affairs in England. My agents David Higham Associates and Scovil, Chichak & Galen Literary Agency deal with rapacious editors and media executives. They both follow my general directive: No reasonable offer will even be considered.

I am well supported by my staff and take this opportunity to thank them all:
Executive Officer: Nalaka Gunawardene
Personal Assistant: Rohan De Silva
Secretary: Dottie Weerasooriya
Valets: Titus, Saman, Chandra, Sunil
Drivers: Lalith & Anthony
Domestic Staff: Kesavan, Jayasiri & Mallika
Gardener: Jagath

Let me end with an extract from my tribute to Star Trek on its 40th anniversary – this message is more relevant today than when the series first aired in the heady days of Apollo: “Appearing at such a time in human history, Star Trek popularised much more than the vision of a space-faring civilisation. In episode after episode, it promoted the then unpopular ideals of tolerance for differing cultures and respect for life in all forms – without preaching, and always with a saving sense of humour.”

Colombo, Sri Lanka
28 January 2007

The warm weather on the East Coast has kept rodents outdoors, but now that colder temperatures have arrived, they're in where it's warmer. Maybe in your house. This author recently trapped 3 mice within 24 hours of deploying a few Victors. 

Well, rodents don't discriminate between commercial and residential properties. Today's Washington Post has the full story:

Rats! XM Radio Scurries to Address Rodent Infestation

By Amy Argetsinger and Roxanne Roberts

If you hear some scratching noises on XM radio, it's probably not static -- but it might be rats. The satellite radio's District headquarters is so infested with the furry little critters that the company has gone to the rat-eradication equivalent of DefCon 1.

"Those of you familiar with DC rodents know that we're looking at the size of small house cats," writes XM senior veep Dan Turner in an internal memo sent to employees on Friday.

Turner goes on to describe the gnawing dread: "Currently we have lost the functionality of Production Room 8 as the rodents have discovered that the cover on our fiber optics cables makes good nesting material. A couple of weeks ago it was one of the multi-function studios that was taken out of commission. Tomorrow it could be a cable to a satellite uplink. It is that serious."

The Beltway, rat-wise, appears to be on the second floor of the XM building, a beautifully restored former printing factory on New York Avenue NE, reports our colleague Paul Farhi. The crawl space under the raised floors "represents an eight-lane superhighway to anywhere the rats want to go," writes Turner.

The broadcaster has summoned Orkin, according to spokesman Chance Patterson, and has enlisted the building's 600 employees in "immediate and very aggressive eradication measures" -- that means no food and drink in the studios (not even coffee? Eeeekk!) and all those magazines, posters and other junk must be tossed because rats like to use them to build nests.

No shock and awe here -- Turner's ready for a long siege. "Eventually, they'll get the building back," he concludes his memo, "but we ain't done with it yet."

If you can't afford a house call from The Orkin Man, you can consult the National Park Service's "Integrated Pest Management Manual."

The NSS-8 satellite is set to launch from a converted oil platform anchored on the equator in the Pacific Ocean, approximately 1,500 miles south of Hawaii. The launch video will be streamed live via the Sea Launch Web site.

The satellite itself is impressive:

The high-power, state-of-the-art NSS-8 satellite is a Boeing 702 spacecraft that carries 56 C-band and 36 Ku-band transponders designed to replace the existing NSS-703 satellite as the centerpiece of NEW SKIES’ strategic Indian Ocean contribution to SES’ global communications network. The successful launch of NSS-8 will subsequently also allow for NSS-703 to be re-deployed to the Atlantic Ocean region at 340° East, further boosting the global coverage and connectivity provided by the 40 plus strong fleet of satellites in the SES Group. NSS-8 will support a wide range of functions, including corporate communications, government and military operations, Broadband Internet services and broadcast applications.

The satellite will provide coverage to two-thirds of the world’s population, serving countries in Europe, Africa, the Middle East, the Indian subcontinent and Asia. Designed for a 15-year lifespan, NSS-8 will have 18 kilowatts of total power at the beginning of life on orbit.