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.
6 comments:
Re: Sirius/XM
At the outset, there seemed a chance that this would truly represent a new approach to radio; but disappointingly over a very short time, its management was turned over to terrestrial radio types who purged it of most of its vitality and grossly overspent for on-air product and talent.
I would not invest in it today either, but have you any advice for those who did and are holding on for dear life because they--frankly--have no other choice?
Next route is the split the stock. Which will keep them from being delisted.
There is also a rumor that XM will sell it's DC building and its clark orbit sats..which would work better for video or telephone anyway.
Its must raise cash everywhere.
Major radio groups that are publically traded are cutting back and laying off people. Truly amazine
Sources at bankrupt Worldspace's Washington HQ say that virtually all the programming and content staff have now been dismissed, with a source stating that the dismissed personnel have not been paid salaries owed to them (which may be remedied once Worldspace can access funds). The same process is well advanced in India where staff have been let go.
It seems the company is now wholly concerned in selling off assets, of which more in a moment. The most telling comment comes from one observer, who requested anonymity, but asked how such a gossamer-thin business model ever got SEC approval for a public offering in the first place.
And class action lawsuits are flying.
technically Worldspace HQ hasn't been in Washington for more than three years
WorldSpace has never been technology wise equipped to offer attractive devices and content to western population. The only segmented groups of people who were eager and ready to pay substantial amount of money to get some of the content were expatriates from developing and emerging countries living in Europe or in other emerging countries. People from Angola Mozambique living in South Africa and in Portugal. West african expatriates living in France,Spain and Italy. Pentecostial nigerian followers living all around europe, etc. Since WS has always wanted to go public they never looked at expanding these markets. They even turned down a potential 8 millions euros deal with a nigerian religious broadcaster. From the getgo they had the wrong targets.
Is there any hope of Worldspace Satellite Radio being revived:
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