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WorldSpace, Inc. (NASDAQ:WRSP) has announced (at last) that it,
along with its U.S. subsidiaries WorldSpace Systems Corporation and AfriSpace, Inc. have filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court in Delaware.
The WorldSpace Board of Directors unanimously determined that Chapter 11 reorganization was necessary for the Company to engage in an orderly process to raise sufficient funds to repay its senior secured and convertible notes by means of either a sale of the Company or its assets, or a recapitalization of the Company.
WorldSpace says it will continue to operate its business and manage its assets as a ”debtor-in-possession” under the jurisdiction of the court and in accordance with the applicable provisions of the Bankruptcy Code and the orders of the court. The holders of the Company’s existing senior secured and convertible notes have agreed to provide, subject to the satisfaction of certain conditions, a “debtor-in-possession” financing facility of up to $13 million for a period of 90 days in order to facilitate a sale transaction. The financing facility is expected to enable the Company to continue to pay salaries of critical employees and continue operations which are critical to preserving the value of its core assets through the term of the facility.So who's going to buy it and how did anyone value this system as worth 13 million? Lets face it, since launch, Worldspace has done nothing but enjoy a long slow decline. They provided an audio-only platform too late to many markets where video was already dominant, and pay-radio to areas with no-tradition for paying for radio. Perhaps the biggest failure was their inability to provide an electronic programme guide of what was on. The marketing hype in the early days "serving 3.2 billion people of the world" and claiming the satellite could be received in cars was just beyond belief. They made an aborted attempt to service Africa with Pay-Radio, but the radios they offered were too expensive (10-30 times an analogue FM set), and the mini-satellite dishes had to be on window-sills or outside on a balcony. If you put the dish outside the sun either destroyed the plastic (UV made it brittle) or the rain got it.
I am using the past tense. In theory, 1worldsapce can pay its bills and get out of this mess. I cannot see this happen in practice. Show me one successful radio station that has built its business plan on distribution via 1Worldspace! Please! Sadly, there isn't one, because the business model was flawed from the start. There is no such thing as international local commercial radio.
And as for providing more radio to Italy in 2009......
WORLDSPACE expects that, beginning in late 2008, it will begin broadcasting throughout Italy with 40-50 channels of commercial-free music, news, entertainment and sports programming, 24 hours a day. WORLDSPACE plans to use the most advanced digital audio technology available today (MPEG-4 aacPLUS v.2) and the service will be promoted extensively via all the media as well as other in-market activities.
WORLDSPACE's programming will include an innovative, unique channel exclusively dedicated to FIAT GROUP AUTOMOBILES, its dealers and customers. For the first time ever, an automobile manufacturer will have a radio channel through which it will offer both promotional and customer-assistance services.Are FIAT cars so unreliable that they would use a satellite radio service to offer customer assistance? Help...I'm confused. The nonsense continues...
Beginning in late 2009, FIAT GROUP AUTOMOBILES will introduce WORLDSPACE satellite radios as factory-installed (OEM) optional equipment on certain of its Fiat, Alfa Romeo and Lancia models. In addition, FIAT GROUP AUTOMOBILES will be able to offer WORLDSPACE portable satellite radio receivers to its customers through its aftermarket channel.Probably not anymore.
Oh, and I see Sirius has let 50 staff go this week as the credit crisis rips into the US tech and entertainment sector. That was on the cards for some time.....but Sirius is another story. Would I recommend anyone to invest in the satellite radio business? No. Have not met any project yet that did the proper market assessment and provided people with what they wanted at the right price.