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Goodbye radio satellite

WorldSpace, a bankrupt satellite radio company, is running low on funds that it is preparing to send its satellites to a premature death.

art and culture Updated: Mar 20, 2010 23:23 IST

WorldSpace, a bankrupt satellite radio company, is running low on funds that it is preparing to send its satellites to a premature death.

WorldSpace has been in Chapter 11 since October 2008 and announced this week that negotiations with a lender and prospective buyer had fallen apart.

“WorldSpace is planning for a potential de-commissioning of its satellites and reviewing its strategic alternatives in light of the termination of negotiations,” the company in suburban Silver Spring, Maryland, USA said in a news release.

WorldSpace was founded by Noah Samara, who dreamed of making programming available to the developing world. The stock was first sold to the public in 2005 at $21 per share, an offering that valued Samara’s holdings at more than $100 million.

The stock has since been removed from Nasdaq stock market and has traded for pennies.

Even before its initial offering, WorldSpace drew attention for its board members and financial backers. Directors included Jack Kemp, a former presidential candidate; Charles McC. Mathias, a former US senator from Maryland; and William Schneider, a former undersecretary of state.

Early investors included Salah Idris, the owner of a plant in Sudan that the United States bombed in 1998, alleging it had ties to Osama bin Laden, and Khalid bin Mahfouz, a Saudi banker who was tied to the BCCI bank scandal of the early 1990s. Both men denied the allegations; when challenged in court, the US government lifted a freeze on Idris’s assets.

From the outset, some observers expressed skepticism of WorldSpace’s plan to build a business by serving impoverished customers. In a 2005 Washington Post story, one satellite communications consultant said the stock offering reminded him of the tech bubble of the late 1990s.

Company employees did not respond to phone and e-mail messages.

WorldSpace has two satellites, one over Asia and another over Africa.

WorldSpace’s “dire cash position” has left it “no choice but to prepare to remove immediately the Satellites from orbit to prevent damage to both the Satellites and equipment in orbit owned and operated by others,” WorldSpace said in an emergency court filing.

The procedure would involve steering the WorldSpace satellites into a higher orbit, out of the way of others, said Tobias Nassif, vice president of satellite operations and engineering at Intelsat, which would assist WorldSpace.

The satellites’ propellant would be dumped and their batteries would be disconnected, leaving them to a frozen death more than 22,000 miles above the Earth.

If they were left unattended in the orbital band used by geostationary satellites, they could drift into others, creating debris that could cause more collisions in a cascade of damage, said John Pike, director of GlobalSecurity.org.

A unit of Liberty Media, which had been funding WorldSpace in bankruptcy and negotiating to buy its assets, called off the talks this month. Liberty has also been a major investor in Sirius XM Radio, and WorldSpace could have become a vehicle for Sirius XM to extend its reach internationally.

WorldSpace had previously announced that it planned to stop broadcasting to India, one of its prime markets, on December 31, according to a statement on its website. The company said it would not be able to provide refunds to subscribers, although they could file claims with the bankruptcy court.

Staff researcher Lucy Shackelford contributed to this report.

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