Set up in the 1960s via international treaty, Intelsat SA has played a critical and often-overlooked role providing connectivity infrastructure for more than a half century so that humanity could witness everything from Neil Armstrong's walk on the moon in 1969 to Kansas City Chiefs QB Patrick Mahomes' recent victory in Super Bowl LIV. But thanks to technological evolution, shifting FCC priorities and the latest COVID-19 pandemic, the company declared Chapter 11 bankruptcy Thursday.
In Virginia bankruptcy court, Intelsat discusses its history as a public intergovernmental organization inspired by President John F. Kennedy's ambitions as well as its future in clearing the way for 5G mobile. With customers including 21st Century Fox, Time Warner, Walt Disney Co. and Discovery, Intelsat now operates the world's largest satellite fleet. Around the turn of the century, Intelsat was privatized and sold to private equity investors.
Intelsat now reports about $14.8 billion in total debt, and while it expects billions in revenue over the next few years — much tied to abandoning C-band spectrum under a reallocation for 5G being led by the Federal Communications Commission — the company has faced political challenges to achieve more income while also dealing with headwinds due to the maturity of debt during an economic crisis.
How has the coronavirus impacted broadcasting in an out-of-this-world sort of way? Intelsat now says it expects $160 million less in revenue than originally budgeted in 2020.
"The Company's media business has been a leader in broadcasting occasional use events such as live sports and concerts," stated Intelstat CFO David Tolley in a declaration supporting first day motions. "Government restrictions and bans on such events have reduced the Company's associated broadcast revenue dramatically."
Intelstat CEO Stephen Spengler commented on the bankruptcy that this was a "transformational moment" in the company's history and that its day-to-day operations would continue as usual as it pursues restructuring to address its cashflow situation.
