ePublisher claims it can save Iridium, turn a profit
Comedy Rescue Plan of the Week?
Updated Las Vegas-based software developer and vanity ePublisher Merit Studios reckons it has come up with a rescue plan to save Iridium's 66 satellites and take the company to profitability. A now a second potential Iridium buyer has emerged following the closure of the ailing satellite-by-cellphone company on Friday. According to a Reuters report, Merit wants to turn Iridium's cellphone traffic-oriented satellites into a data network. The key: Merit's own data compression software. Merit's Web site doesn't mention such software, but it does offer would-be authors and independent filmmakers ePublishing and DVD release oportunities. Yes, we're not convinced either, but let's follow this one through. Merit's CEO, one Michael John, emailed Iridium's liquidation lawyers with the plan on Sunday, two days after Iridium shut its systems down. John's scheme centres on the formation of a new company in place of Iridium. Stock in the company would be split between 40:30:30 between Merit, Iridium shareholder and Iridium creditors. Creditors would also receive 20 per cent of the new company's net profits until Iridium's debts are cleared. It sounds a tempting offer. After all, if Iridium completes its liquidation, the creditors are unlikely to see the return of their investments, and at least this offers the possibility of profit. That said, switching the satellites from voice to data may prove rather more expensive than John and his unnamed investment partners can afford - and its hard to see existing creditors pumping in more cash on the off-chance the scheme will pay off. ICO Global Communications, which began life as a voice-oriented satellite network but then recast itself as a broadband networking system, could only make the switch because its satellites had yet to be launched. The conversion is costing around $60 million. That can't be done to Iridium's satellites without first bringing them to Earth (which is going to happen anyway at least), converting the hardware and then (and this is the real zinger) launching them into orbit again. This cost may have been what finally put Teledesic boss Craig McCaw off acquiring Iridium himself. Hot on the heels of Merit Studios' email proposal, another ePublisher, HotJump, has launched its own bid for Iridium's satellites, according to NUNet. And like its rival, it wants to turn Iridium into a broadband data network provider, to be up and running by 2003. Merit's compression software, on which the scheme is based - the plan calls for compressed news and advertising to be distributed via the satellite network to ISPs' customers - is said to offer a 10:1 compression ratio, which isn't much to write home about. Merit claims it is "close" to being able to offer 40:1, with the possibility of getting that to 1000:1. It seems a bit much to base the rescue of Iridium on a possibility, and we wonder whether Merit's offer is entirely serious. Has perhaps Reuters been taken in by a cunningly worded press release? The report is certainly giving the small software company and its compression technology a lot of publicity... ® Related Stories So Farewell, Iridium, shot down in flames Iridium rival satellite plunges into the sea Motorola tells Iridium customers to expect the worst Iridium steels itself to decomission satellites Craig McCaw cuts losses and abandons Iridium