WASHINGTON — MacDonald Dettwiler and Associates told investors May 23 that its pending acquisition of geospatial imagery and services provider DigitalGlobe will help offset the revenue peaks and valleys of MDA’s satellite manufacturing business.

Canada-based MDA’s satellite sales shrank by $71.2 million year-over-year for the first three months of 2017 to $332 million, the brunt of which the company attributed to fewer geostationary communications satellite sales. Total first quarter revenue stood at $494.3 million. Commercial communications satellite orders have averaged below the annual norm of around 20 worldwide for the past two years — a trend that has arguably affected MDA more acutely than competitors that also have defense satellite orders in tow.

DigitalGlobe of Colorado, by comparison, grew its first quarter revenue by 19.6 percent to $209.7 million, thanks to last year’s acquisition of geospatial firm Radiant Group for $140 million.

MDA and DigitalGlobe announced their intent to merge in late February, catalysing a $3.6 billion transaction split into $2.4 billion of cash stock and $1.2 billion in debt. MDA and DigitalGlobe revealed at the time that they had been quietly collaborating on a next-generation Earth-observation constellation called WorldView Legion that MDA-subsidiary Space Systems Loral will build in Palo Alto, California.

In an investor presentation May 23, MDA President and CEO Howard Lance, president and chief executive of MDA, said the top reason for the merger is “to diversify the company from being focused mostly on communications satellites more into the Earth-observation market,” followed by gaining the ability to “forward integrate from just providing satellites to providing data services and analytics, and the more steady flow of revenue and profit that comes with that much less cyclical business.”

New high-throughput satellites in geostationary, medium- and low-Earth orbit have caused operators to hesitate in procuring new platforms until they are sure to make the right bet on assets that could last two decades or longer. Lance said MDA is expecting telecom satellite operators to starting making up their minds on these platforms.

“We are right now for the last 18 months at the low part of the cycle as customers are evaluating the competing technologies. We think that’s going to lead to later in 2017 and 2018 to significant market rebound from the broadband part of the market,” he said.

Replacement satellites for the more stable direct-to-home television broadcast market will be in demand, too, he added.

Lance said combining with DigitalGlobe will also address MDA’s challenge in generating international sales for its satellite radar imagery. As a single company, Lance said MDA will be able to leverage DigitalGlobe’s relationships with allied nations of the U.S. and Canada to increase its distribution.

MDA, which relocated its operations under a U.S. holding company last year, continues to fashion itself as a U.S. company to better compete for Pentagon contracts. Lance said MDA now has U.S.Defense Department authorization to compete for classified work within the U.S. space market, and still expects to be fully headquartered in the U.S. by the end of 2019. He said the merger completion remains on track for the second half of this year.

The MDA-DigitalGlobe merger brings greater stability to DigitalGlobe’s revenue forecasts as well. DigitalGlobe President and CEO Jeffrey Tarr said that 45 percent of the company’s revenue today comes from its EnhancedView contract with the U.S. National Geospatial Intelligence Agency, but will comprise 15 percent of the combined company’s revenue after the merger closes.

Tarr said that though the EnhancedView contract is scheduled to expire in 2020, DigitalGlobe anticipates the U.S. government will continue to need its services.

“There’s nothing that changes about the mission and the need for the U.S. government to maintain that kind of data to support warfighters, first responders, coalition partners, and a wide range of use cases,” he said. “And as we look at the marketplace, we don’t see anybody who is developing the capabilities that meet the requirements of the EnhancedView contract, so we feel very good about the long term future.”

DigitalGlobe’s WorldView Legion constellation is being designed to protect the company’s technological edge in a market that has grown increasingly crowded with new imagery providers. Executives from both companies remain tight-lipped on the details of the system, saying little more than that it will feature multiple satellites capable of revisiting areas of interest up to 40 times a day with high accuracy and high resolution. WorldView Legion will replace DigitalGlobe’s WorldView-1 and 2 satellites in orbit today.

Caleb Henry is a former SpaceNews staff writer covering satellites, telecom and launch. He previously worked for Via Satellite and NewSpace Global.He earned a bachelor’s degree in political science along with a minor in astronomy from...