Skip to main content

New PanAmSat CEO Eyes Core Customers

Joseph Wright Jr. will take the CEO reigns at PanAmSat Corp. and plans to refocus the satellite provider on its core customer base, including cable networks and their future delivery needs.

Wright took over in August from R. Douglas Kahn, who'd been CEO since April 1999. "We're changing our strategy slightly [by] paying attention to increasing the profitability" of the company, Wright said.

To start, PanAmSat plans to reduce its employee count from 850 to 720, and cut capital-expenditure spending over the next three to four years from $1.7 billion to $1 billion. The company, which is 81-percent owned by Hughes Electronics Corp., is about to embark on an investor road show to raise $2 billion. Of that cash, $1.7 billion will be used to pay off a Hughes loan and the remainder for corporate purposes.

The company is also in play: News Corp. chairman Rupert Murdoch and EchoStar Communications Corp. chairman Charlie Ergen are eyeing the Hughes parent. Either winner in the battle for DirecTV Inc. is likely to jettison PanAmSat and its fleet of 21 satellites and associated ground stations and customer-service centers, industry analysts have speculated.

Wright isn't speculating on that outcome. He said PanAmSat's decision to refocus on its client base, which includes videostreaming, would occur regardless of its ownership position.

Eleven of PanAmSat's 21 satellites operate over North America, including the Galaxy birds that serve as the cable industry's workhorses. In total, the company has spent $3 billion to put its fleet of satellites, which cover 850 transponders, into space.

Wright said PanAmSat will pour another $1 billion into launching new and replacement birds over the next four years, while paring $25 million to $30 million in costs to drive profitability.

"We have an enviable position in the industry, because we're global in nature and have an outstanding customer base," he said. "We have $6 billion in backlog, and 85 percent of our revenues for 2002 are under contract."

The company's utilization rate — one area primed for growth — stands at 68 percent, said Wright. A second growth area is international distribution and a third is in Webcast Services, the renamed NET-36 broadband content delivery division.

Webcast provides major content providers with satellite backhauls for streaming events. PaAmSat donated satellite-network facilities to Country Music Television and MTVi for the Webcast of the Oct. 21 benefit concert for the Sept. 11 terrorist attacks. The company also distributed the MTVi Webcast of an Alejandro Sanz concert in Latin America.

In both cases, MTV used PanAmSat's Galaxy XR satellite to bypass much of the terrestrial Internet, and send the content feed directly to edge servers.

Through its agreement with Excite@Home Corp. and Qwest Communications International Inc., PanAmSat has hundreds of edge servers across the country.