SES Consolidating Its New Skies and Americom Subsidiaries

— Satellite fleet operator SES is merging its New Skies and Americom divisions into a single unit and is weighing a restructuring of Americom’s IP-Prime service providing television to telecommunications companies, according to Rob Bednarek, the chief executive of Americom and New Skies.

In a Sept. 5 interview, Bednarek, who was already head of The Hague, Netherlands-based SES New Skies when he assumed his new role at Americom this summer, said bringing the two divisions together is part of a broader push by SES to squeeze efficiencies from its global operations.

Luxembourg-based SES currently maintains its three main satellite services divisions – Americom, Astra and New Skies – as distinct entities with their own geographic responsibilities. Americom has prime responsibility for North and , Astra for and New Skies for the rest of the world.

The New Skies and Americom divisions, he said, may keep separate names for awhile but ultimately will be merged.

“We have already started by the creation of SES Engineering, which handles procurement for the group as a whole,” Bednarek said. “It gives us a common pool of engineers to oversee manufacturing, and for launch-vehicle optimization.”

Bringing separate organizations under a single roof provides satellite manufacturers with a single point of contact to discuss industry trends and what new features SES would like to see. “It would be helpful if we gave them some guidance on how to develop the [satellite] product further,” Bednarek said.

Americom and New Skies also can learn from each other’s strengths, he said. Americom has a deeper history of product innovation that New Skies could use, while New Skies, because of its more diverse customer base, has demonstrated flexibility in sales and marketing that could benefit Americom.

“Americom has longer-term contracts, while New Skies has had to adapt to a world of shorter-term contracts, selling fractional transponders and so forth. New Skies can better handle a customer coming in who wants, say, a couple of megahertz of capacity, starting tomorrow.”

In addition to concluding the merger of the two divisions, Bednarek said a near-term focus at Americom will be the possible restructuring of IP-Prime, which distributes more than 200 television channels to local telephone networks and telecommunications operators for distribution to customer televisions via DSL links. So-called IPTV was once thought to be in the take-off stage, but industry officials have questioned whether IP-Prime has delivered on its promise.

Bednarek said he still believes that having an IP-encapsulated, MPEG-4 compression-capable conditional-access service like IP-Prime is a valuable asset for SES and could find a host of applications including mobile telephones and more directly in the cable industry. But he conceded that it remains unclear if SES should remain directly involved in developing the business.

“What we’re now looking at is: Who is the right party to scale this thing up?” Bednarek said. “Are we at SES prepared to go to the thousands of telcos in the United States and install head-end equipment [necessary for the link from the satellite to the customer]? It’s like the cable head-end business. We don’t install the head-ends. It makes some sense to get some other people to do this. Some telcos are doing it themselves already. They tell us, ‘We’ll just take the program feed.’”

Bednarek said Americom, which has sold large amounts of capacity on several of its satellites to EchoStar Corp. of , , continues to take a benign view of EchoStar’s announced decision to compete with Americom, and with Washington-based Intelsat, for customers in the

EchoStar Chairman Charlie Ergen has said his company has lots of spare capacity on its fleet that is not needed by direct-broadcast television provider Dish Network, which Ergen also owns. That free capacity, he said, will be used to carve out a fixed satellite services market in what today remains essentially a duopoly in the United States and Intelsat.

“I do not view EchoStar as being a real competitor to us at this point,” Bednarek said, acknowledging that not many large multiyear broadcast contracts have come up for renegotiation since EchoStar was spun off from Dish Network earlier this year.

“They are obviously a big customer of ours, and it is true that demand for Ku-band capacity in the is robust now,” Bednarek said. “But look: We are a large FSS [fixed satellite services] operator with a long history that will be in the market for a long time to come. We’re not in the ‘sell what we happen to have’ business. We have a long-term role here and customers want to know the company they’re dealing with will be there over the long haul. We sell customers something more than just a particular slot in Ku-band.”