Mac News: Cable & Satellite: ViaSat to Pocket Wild Blue for $568M

ViaSat to Pocket Wild Blue for $568M

By Deborah Yao
AP
10/01/09 8:54 AM PT

ViaSat's acquisition of Wild Blue will bring it into direct contact with consumers for the first time, as it provides Internet services to the company's 400,000 subscribers. Customers will have access to faster download speeds -- 2 Mbps to 8 Mbps -- as a result of the deal, compared to the wimpy 1.5 Mbps available to them now. For most, their only alternative to satellite service is dial-up.

ViaSat is acquiring Wild Blue Communications, a provider of high-speed Internet access via satellite, for US$568 million in cash and stock, the companies said Thursday.

Privately held Wild Blue, in which Liberty Media holds a 37 percent stake, will become an operating subsidiary of ViaSat, which makes satellite communications equipment for defense and consumer markets.

Carlsbad, Calif.-based ViaSat plans to buy Wild Blue for $443 million in cash and $125 million in new common stock. Liberty Media, controlled by media mogul John Malone, will appoint a representative to ViaSat's board. Mark Carleton, senior vice president at Liberty, is Wild Blue's chairman.

Easier Downloads

ViaSat is planning to launch a satellite in the first quarter of 2011 that will enable Wild Blue to offer speeds of 2 Megabits per second to 8 Megabits per second -- closer to those offered by cable operators. Currently, Wild Blue's speeds top out at a DSL-like 1.5 Mbps.

ViaSat plans to hold prices essentially the same for consumers, which range from $39.95 to $79.95 a month for speeds of 512 kilobits per second to 1.5 Mbps.

Wild Blue, based in Denver, serves 400,000 subscribers of which around 90 percent have dial-up Internet access as their only alternative. The company holds 44 percent of the U.S. satellite ISP market.

The higher speeds will enable easier downloads of videos and other multimedia for Wild Blue's customers. Wild Blue's service is resold by DirecTV (Nasdaq: DTV) Group, Dish Network, AT&T (NYSE: T) and the National Rural Telecommunications Cooperative.

Bandwidth for Growth

The purchase marks the first time ViaSat will be dealing directly with consumers. The deal , expected to close by April, should boost ViaSat's earnings before one-time items.

Wild Blue has struggled with having enough capacity to add more customers, and ViaSat's new satellite should provide the bandwidth needed to grow.

Rival satellite ISP HughesNet, a unit of Hughes Communications, also offers higher speeds, but ViaSat's new satellite should make Wild Blue more competitive.

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