WorldSpace still claims to be one of the “world leaders” in satellite-based digital radio services, but WorldSpace is a tad different from the two other players in the sector, XM and Sirius, in that they are adding subscribers.
Number three in a field of three, WorldSpace admits in its latest SEC
filing that it is now in negative subscriber territory, down 2,696
subscribers during the quarter-year to March 31, to just 171,470 subs.
Indeed, WorldSpace says it has a “planned cessation of marketing
efforts in India and other parts of the world…”, and this despite
expending millions of dollars in India in an attempt to get listeners
to buy into the WorldSpace concept.
And WorldSpace’s astronomic losses continue to mount. Despite having
next-to-nothing in the bank and total revenues during the quarter of a
meagre $3m, it managed to spend $36.4m, albeit a reduction of 10% of
the $40.6m expenditure in the same period a year ago. There’s no doubt
that founder, president, CEO and lender of last resort Noah Samara
certainly knows how to tighten the company’s belt when times are tough.
A Samara-controlled company (Yenura Pte Ltd) had promised to cough up
$40m in subordinated financing for WorldSpace, but the cash has been
slow to arrive. “The realization of these business objectives has been
limited by the continued slow availability of funds from the facility,”
said Samara’s WorldSpace SEC statement while talking about his own
lending commitment to the firm. He added: “I am concerned about the
Company's cash position and its pending and near-term payment
obligations, including those to our debt holders. We are working very
hard to solve this liquidity issue and will announce something as soon
as we have a commitment.”
WorldSpace – on March 31 – had just $2m in the bank, plus other
restricted cash and investments of about $5.6m. On Friday, May 16,
WorldSpace was significantly outbid (by Qualcomm) in the auction for 40
MHz of L-Band spectrum in the UK, which means the company cannot now
offer terrestrial retransmission of any satellite-radio service it
offers over Europe – at least not in L-Band.
Towards the end of last year Samara made a number of key statements as
to WorldSpace’s immediate near-future, as well as announcing the Yenura
$40m financing lifeboat. On the question of further cash injections, he
told analysts that in certain cases these discussions had reached the
“due diligence” stage, adding that new financing would be in place by
year-end. He spoke of advanced discussions with Turkish and South
African partners for financing at local levels.
While singing the praises of recent progress in Europe with terrestrial
repeater licences, the SEC statement ignores major repayment
commitments that are now just days away.
We’re not the only ones watching this train-wreck happening. On
Thursday May 15 WorldSpace stock price tumbled from $1.70 to $1.45 (and
rose a few cents on Friday). Of course, that price has been worse, they
fell to just 88 cents in February – but a year ago they stood at $5.66.
Confidence is not good.