Is WorldSpace/Liberty Deal Lost in Space?

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Still another shoe has dropped in the saga of satellite radio pioneer WorldSpace, stuck in Chapter 11 reorganization since 2008, and seemingly doomed to haunt the halls of a U.S. bankruptcy court in Delaware.

On March 17, 2010,just as it looked like the bankrupt firm's remaining assets would be acquired by Liberty Satellite Radio, a wholly owned subsidiary of John Malone's Liberty Media, negotiations were hung up in an unexplained impasse.

Rumors have since circulated that Liberty, which purchased the bulk of WorldSpace's debt and also holds a 40 percent interest in Siruis XM, was unhappy with the direction the talks were taking. Some observers believe that rampant speculation by investment bloggers suggesting Liberty would leverage WorldSpace into a global platform for Sirius XM emboldened WorldSpace's Debtor in Possession (DIP) officers to ask for more than Liberty was willing to commit on such a high debt acquisition.

Since that time, WorldSpace's DIP has publicly threatened to decommission both AfriStar and AsiaStar by pushing them into higher orbit, effectively ending service by the aging birds.

A subsequent attempt by Liberty to persuade the bankruptcy judge in the case to prevent the WorldSpace DIP from decommissioning the satellites failed, but the latest move came when Liberty filed with the FCC to terminate its prior application to take control of the satellite licenses. The Commission's International Bureau accepted that filing on April 8.

In the month since, neither party has issued any public statement. Reports from owners of operational WorldSpace receivers indicate that as recently as last week AfriStar was still relaying some program channels, with no indication given that decommissioning is imminent.

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