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Loral reaches for Skynet
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September 25, 1996: 3:37 p.m. ET
Firm to buy AT&T's broadcast- satellite unit for $712.5M
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NEW YORK (CNNfn) - Loral Space and Communications Ltd. announced plans Wednesday to purchase AT&T Corp.'s Skynet broadcast-satellite unit for $712.5 million in cash.
"The demand for satellite services is huge and growing," Bernard Schwartz, Loral's chairman and chief executive, said in a statement announcing the deal. "It is the most cost-effective method of extending high-quality broadcast and broadband interactive multimedia services worldwide."
Bedminster, N.J.-based Skynet operates a major U.S. satellite-distribution systems for news, entertainment and educational programming.
Skynet's customers include Viacom, the Public Broadcasting System and ABC television, a Walt Disney Co. unit.
Skynet also leases satellite capacity to direct-TV firm AlphaStar Inc.
Loral said the acquisition will establish a network for universal video, data, and voice delivery that rivals that of competitor Hughes Electronics Corp., a General Motors Corp. unit. Last week, Hughes announced plans to buy PanAmSat for $3 billion in cash and stock.
Schwartz has long been a proponent of coordinating a "network" of satellite systems.
As for AT&T, its decision to jettison Skynet -- one of its non-core businesses -- comes at a time when the communications giant faces enormous expenses to challenge the so-called "Baby Bells" in the local-telephone market.
New federal laws will soon allow AT&T to offer local telephone service for the first time since 1984, when a court settlement broke up the old Bell system phone monopoly into AT&T and seven "Baby Bells."
At the time, the settlement banned AT&T from offering local service, while prohibiting the "Baby Bells" from operating in the long-distance market.
However, a new communications law will soon end those proscriptions, pitting long-distance giant AT&T against powerful "Baby Bells" like Bell Atlantic and Ameritech in both the long- and short-distance markets.
From staff and wire reports.
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