Geospatial Giants DigitalGlobe, MDA Unshaken by New Lineup of Earth Observation Players

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PARIS — Two of the dominant players in satellite-based geospatial information gave investors brief assessments of how they view the flurry of activity — new Earth observation constellations announced, existing players merging — in the past year.

DigitalGlobe of the United States and Canada’s MDA Corp. approach the issue from different angles.

Westminster, Colorado-based DigitalGlobe has a constellation of high-resolution optical satellites and is the principal commercial provider to the U.S. government. It views the new constellations from a competitive-threat perspective, although to date the company has shown no sign of being worried.

Asked about a specific recent merger transaction — the purchase by San Francisco-based Planet Labs of Berlin-based BlackBridge and its five RapidEye low-resolution satellites — DigitalGlobe Chief Executive Jeffrey R. Tarr gave the impression of a professional football coach assessing a second-division college team.

“It’s interesting to see emerging players combine with established players with low-resolution assets,” Tarr said in a July 30 conference call with investors. “We’ll see how it plays out.”

He said he saw no competition coming from the new constellations that would eat into DigitalGlobe’s U.S. government market.

“It takes a long time to come up with turning a pretty picture into something that is useful to the customer,” MDA Chief Executive Daniel E. Friedmann said. Credit: Courtesy of Daniel Friedmann
“It takes a long time to come up with turning a pretty picture into something that is useful to the customer,” MDA Chief Executive Daniel E. Friedmann said. Credit: Courtesy of Daniel Friedmann

Richmond, British Columbia-based MDA is a major provider of radar satellite data from its Radarsat 2 satellite, with the U.S. government as the biggest customer, but also provides ground segment hardware for companies like DigitalGlobe.

As a satellite builder, MDA’s Space Systems/Loral (SSL) of Palo Alto, California, is prime contractor of 13 satellites for Skybox Imaging of Mountain View, California, which is owned by Google Inc. MDA and SSL are bidding to build other constellations as well.

“It takes a long time to come up with turning a pretty picture into something that is useful to the customer,” MDA Chief Executive Daniel E. Friedmann said in a July 30 conference call with investors. “We have been trying to do this [with Radarsat] for 20 years.”

Radarsat 2 has shown record orders so far this year despite the fact that “the oil and gas sector has tanked” in the wake of lower global crude-oil prices, Friedmann said. U.S. government agencies have more than picked up the slack as they return to the market after a two-year hiatus due to broader U.S. government budget issues.

Friedmann said MDA does not believe many of the new constellations will survive even through the satellite manufacturing stage because their funding will dry up.

“A lot of people are trying to build Earth observation constellations,” Friedmann said. “I’ve never seen anything like it. We’re working on most of them. But all of them, except Skybox and DigitalGlobe, are unfunded. It’s unclear whether they will get funded.

“Normally we have a policy of trying not to work on things that are not funded. In this case, we’ve had to break the policy. So we’re working on some of those constellations.

“There are certainly way more constellations than there is a market, so something has to give. So we have a pipeline [of new Earth observation business opportunities] but it’s an unfunded pipeline in that area, by and large. We have some funded pipeline. Skybox is planning to build more satellites.”