Intelsat Ltd.'s proposed purchase of PanAmSat Corp. would alter the industry landscape by creating the largest fixed satellite services operator with a dominant position in the crucial U.S. market for video and television transmissions. What remains to be seen is whether the $3.2 billion deal, announced Aug. 29, would be beneficial to the long-term health of the industry, Intelsat included. The merger seems driven by a compelling logic, aside from the obvious cash windfall it would bring to the private-equity firms that agreed to purchase PanAmSat in 2004. It is not unlike the logic behind other landmark telecom and aerospace mergers of the last decade or two: Size means clout, which leads to savings that in theory can be passed to the customer, to everyone's benefit. In Intelsat's case, the increased clout likely would manifest itself in three particular areas: insurance, satellite manufacturing and launch services.
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