Space Systems/Loral, the satellite manufacturing division of Loral Space & Communications Ltd., likely would be sold or shut down if EchoStar Communications Corp. acquires all of the company's assets, according to some analysts.

It's unlikely EchoStar would want to enter the satellite manufacturing market given the downturn affecting the U.S. telecommunications industry, analysts said.

EchoStar, based in Littleton, Colo., provides direct broadcast satellite (DBS) television products and services to customers worldwide via its Dish network.

"I don't see why anyone would be interested in getting into the satellite manufacturing business," senior space analyst Marco Caceres of the Teal Group said. "Space Systems/Loral [SS/L] would likely be sold. There's no demand for the satellites that Loral has been spending a great deal of R&D money on over the last five years or so."

Loral began experiencing financial difficulties about two years ago following its entry into the satellite services market (DAILY, Aug. 4).

In July, the company filed for Chapter 11 bankruptcy protection and agreed to sell half its satellite fleet to Intelsat Ltd. for $1.1 billion cash (DAILY, July 16). The satellites include Telstars 4,5,6 and 7 and Telstar 13, which was launched Aug. 8, as well as Telstar 8, scheduled to be launched in the first half of next year.

The satellites provide voice, video and data to customers in North America. Loral continues to operate its remaining fleet of five satellites that serve markets in South America, Europe and Asia.

Counteroffer

Earlier this week, Loral officials announced that EchoStar had made an informal counteroffer for the satellites. EchoStar also expressed interest in acquiring the rest of Loral's assets, including SS/L.

"EchoStar's interest reconfirms the value of assets assembled by Loral over the years," Loral Chairman and CEO Bernard Schwartz said in an Aug. 19 statement. "We will consider all bids received very carefully, noting that our current plan is to emerge from the bankruptcy process with a viable, ongoing satellite services and manufacturing business."