Roundup: Hughes, Media General
From staff and wire reports
*Hughes Communications will use cash instead of debt to finance a new satellite that moves data 10 times faster than its existing service, CEO Pradman Kaul said. "We currently have enough cash and enough from our projected cash flow to more than pay for the satellite," Kaul said in an interview. "We're fully funded. No new money is needed." The satellite will cost an estimated $400 million, he said.
Hughes, a Germantown-based high-speed Internet provider for rural U.S. customers, needs the new satellite to expand capacity. The company's 430,000 high-speed Internet subscribers may increase by 15 percent to 20 percent a year, Kaul said. Hughes estimates that 15 million U.S. households are in areas without access to conventional high-speed Internet service from telephone and cable companies.
The new satellite will move data at 100 gigabits a second, Kaul said. The current service is 10 gigabits a second.
*Media General said third-quarter profit more than doubled, rising to $6.1 million (28 cents a share) from $2.5 million (11 cents), despite weak advertising sales at its newspapers and television stations largely because of an infusion of ads from the Olympics and the presidential campaigns. Revenue dropped 11 percent, to $194 million.
Media General also said it has begun negotiations with its lenders on changing the terms of its loans, joining many other newspaper companies looking for new agreements to help them avoid technical default. Executives expect to pay higher interest rates in exchange for flexibility in financial thresholds, or covenants, that are becoming harder to meet because cash flow is dropping faster than debt as advertising revenue plummets.
"When you look at our most likely multiyear forecast scenario, it has us good relative to covenants, but too close for comfort," Chief Financial Officer John Schauss said during a conference call. "And that's why we are talking to our banks actively right now."
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