BSkyB Renews SES Transponder Lease
PARIS — Britain’s BSkyB satellite-television broadcaster has renewed long-term leases on 24 transponders at satellite-fleet operator SES’s 28.2 degrees east orbital slot in what is expected to be one of the year’s largest satellite-broadcast transactions, London-based BSkyB and SES of Luxembourg announced.
Separately, SES announced that it had sold a five-year bond valued at 650 million euros ($914 million) in a transaction that SES said July 1 was 5.8 times oversubscribed by investors in the United States and Europe . SES said the bond pays 4.875 percent interest.
The BSkyB transaction was viewed by some analysts as providing an indication of whether the economic downturn, which thus far appears to have had only a minimal effect on satellite-television providers, would place SES in a position of weakness in its negotiations with the British broadcaster. BSkyB, owned by News Corp., is one of SES’s biggest customers.
A company with a large installed base of antennas looking at SES’s orbital slot cannot easily change satellite providers without incurring the cost of shifting its subscribers’ rooftop antennas. BSkyB was one of SES’s first customers and has been leasing capacity continuously since 1989, SES Astra Chief Commercial Officer Alexander Oudendijk said in a June 30 statement.
But BSkyB has also leased four transponders with Paris-based Eutelsat, whose Eurobird satellite is located at 28.2 degrees east — just three-tenths of a degree away from the SES Astra position.
Toby Hemming, a BSkyB spokesman, on July 2 declined to comment on whether it was able to use the threat of increasing its use of the Eutelsat slot to bring down SES’s prices. SES spokesman Markus Payer declined June 30 to detail the pricing arrangement beyond saying the 24-transponder deal is a renewal of two existing contracts that were set to expire at different times — one this year and another in the next two years.
Payer said the conclusion of the BSkyB negotiations will not force SES to change its mid-term revenue and earnings guidance. But because that guidance stops in 2010, a 10- to 12-year contract with BSkyB would have to be dramatically over or under SES’s planning to have an impact on near-term revenue forecasts.
Mike Darcey, chief operating officer of BSkyB, said the new long-term lease gives the company “the ability to scale in line with the increasing demand from consumers for [high-definition television], one million of whom already subscribe to Sky+HD.”
BSkyB has about 9.3 million subscribers in the United Kingdom and Ireland , with about 15 percent of them subscribing to the company’s triple-play package of television, Internet and telephone service.
In its annual report covering activity through June 30, 2008, BSkyB said it had 294 million pounds ($486 million) in satellite transponder leases, of which 67 million pounds expired within one year and 78 million pounds expired between one and three years.
In a May report to investors detailing financial results through March 2009, the broadcaster reported increased transponder prices as the company expanded its use of bandwidth-hungry high-definition television broadcasts. BSkyB and SES in 2008 negotiated the renewal of leases of seven transponders. BSkyB’s total transponder-lease package with SES stands at 31 transponders.