October 25, 2004
The Care and Feeding of High Resolution Imaging Satellite Companies
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Susan Smith - Managing Editor


by Susan Smith - Managing Editor
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Message from the Editor -


Welcome to GISWeekly!The big plum in the area of commercial remote sensing contracts this last month has been the
NextView Second Vendor Award awarded by the National Geospatial-Intelligence Agency (NGA, formerly the National Imagery and Mapping Agency, NIMA). The contract went to
ORBIMAGE after a competitive selection process lasting six months. The contract, valued at approximately $500 million, was awarded September 30, 2004 and will run through September 30, 2008. NextView
ORBIMAGE, as the contract is called, provides ORBIMAGE with long-term revenue commitments and capital for development of OrbView-5 next generation high-resolution imaging satellite.


NextView ORBIMAGE is the last of the NextView contracts from the NGA. Read about commercial high resolution imaging satellite companies and their future in this week's Industry News. Also in the news this week is Daratech's forecast for the GIS industry.


GISWeekly examines select top news each week, picks out worthwhile reading from around the web, and special interest items you might not find elsewhere. This issue will feature Industry News, Acquisitions/Alliances/Agreements, Announcements, Appointments, New Products, Around the Web and Upcoming Events.


GISWeekly welcomes letters and feedback from readers, so let us know what you think. Send your comments to me at


Best wishes,

Susan Smith, Managing Editor




Industry News


The Care and Feeding of Commercial High Resolution Imaging Satellite Companies

By Susan Smith


The big plum in the area of commercial remote sensing contracts this last month has been the
NextView Second Vendor Award awarded by the National Geospatial-Intelligence Agency (NGA, formerly the National Imagery and Mapping Agency, NIMA). The contract went to
ORBIMAGE after a competitive selection process lasting six months. The contract, valued at approximately $500 million, was awarded September 30, 2004 and will run through September 30, 2008. NextView ORBIMAGE, as the contract is called,
provides ORBIMAGE with long-term revenue commitments and capital for development of OrbView-5 next generation high-resolution imaging satellite. On October 4, ORBIMAGE released an
announcement outlining the financing for OrbView-5, estimating that total project costs for developing, financing and launch insurance costs will be approximately $502 million.


According to the NextView contract, ORBIMAGE will fund its cost share for the project through a combination of an equity offering of $65 million, an issuance of $155 million of senior subordinated indebtedness, and $45 million in cash flow from existing operations. Revenue commitments from the NGA contract will commence following OrbView- 5's in-service date.


According to the press release, ORBIMAGE's principal partners for the development and launch of the OrbView-5 satellite include General Dynamics (formerly Spectrum Astro), Kodak/ITT Industries and Boeing Launch Services. ORBIMAGE's partners for the ground segment include IBM and MacDonald, Dettwiler and Associates of Canada.


An artist's rendering of ORBIMAGE's planned OrbView-5 satellite. (Image courtesy of General Dynamics Corporation). (PRNewsFoto)
ORBIMAGE's next-generation OrbView-5 satellite system will orbit 660 km above the Earth in a sun-synchronous orbit while collecting imagery at 0.41 meter resolution in the panchromatic (black and white) mode, and 1.64 meter resolution in the multispectral (color) mode. When OrbView-5 joins the company's OrbView-3 satellite in early 2007, the constellation will collect more than 1.2 million square kilometer of imagery per day with a combined revisit period of less than 1.5 days for any geographic target.


Interestingly, the Virginia company emerged from bankruptcy less than a year ago, to snag the contract which is sought after by all commercial remote sensing company in the U.S. These contracts are the lifeblood of commercial remote sensing vendors who have an extremely high “overhead” in building and launching a new satellite and maintaining aging ones. U.S. companies ORBIMAGE, Space Imaging and DigitalGlobe jockey for position in the race for contracts such as NextView to be able to advance their technology to improve collection capacity, improve resolution and provide cutting edge satellite imagery for defense.


These three companies were formed after a U.S. policy directive in March 1994 permitted private ownership of satellites that were previously the sole domain of government agencies. High resolution satellite imagery was expected to have a high demand in the commercial sector; however, commercial satellite imagery providers have found themselves almost totally reliant on government business since the directive. Potential commercial markets for high resolution satellite imagery include, insurance, urban planning and agriculture.




DigitalGlobe


Colorado-based DigitalGlobe is well positioned as the winner of a NextView award on September 30, 2003, of over $500 million. This award has helped fund DigitalGlobe's next generation satellite imaging system, WorldView.


According to the September 30, 2003
press release, DigitalGlobe's list of satellite and launch vehicle partners includes Ball Aerospace & Technologies Corp and Boeing Launch Services. In addition to the Space segment partners DigitalGlobe has assembled the industry leaders to work on the Ground segment. BAE SYSTEMS is the lead for the Production Segment development team and also for coproduction. Other partners include Boeing Autometric, AERO-METRIC, EarthData, ESRI, Harris Corp., IBM, and InSequence, offering coproduction, internal business systems, e-commerce solutions, other software components
and systems engineering. DigitalGlobe has also teamed with Chantilly, Virg.-based Spot, the American subsidiary of France's Spot Image, as an alternative imagery supplier.




Space Imaging


An
article in Space News back in March, 2004 stated that the NGA had broken off NextView contract talks with Colorado-based Space Imaging. The end of negotiations marked a significant shift for Space Imaging, as the company was very focused on having a next generation satellite built, and the NextView win was an integral part of their business plan.


Space Imaging still has $36 million worth of work to do on an NGA ClearView contract they won three years ago. (ClearView contracts are for the purchase of current imagery from the current generation of commercial satellites, whereas the NextView contract is about funding the building of a satellite two or three years out.) They launched their IKONOS satellite, the first commercial high resolution satellite, in September 1999, which will operate through 2007.


Although some news reports have expressed concern about the future of Space Imaging as a result of losing the NextView award, according to Gary Napier of Space Imaging, the company has many options at this time and financially is in good shape. Their revenues were in the range of $220 million last year. Only half their revenue comes from U.S. defense contractors; the other half comes from international revenue. Space Imaging sells time on IKONOS and flies over foreign groundstations. The company has 13 groundstations, both government owned and commercial. There are so many other departments in defense to do business with without going through the NGA, said Napier.


Space Imaging has recently
sold off its Federal Civil/Commercial Business Solutions unit to a company called Geo360 Corporation that provides mapping and GIS services to federal, state and local customers. Approximately 55 Space Imaging employees will move over to Geo360 with this sale.


Originally, Space Imaging was formed by Lockheed Martin and Raytheon to meet the anticipated demand for commercial high resolution satellite imagery.




Summary


In a recent article, NGA Director James Clapper, retired U.S. Air Force General, said that the NGA does not plan to help underwrite the construction of any more commercial satellites, making the one just won by ORBIMAGE the last NextView contract. “We would like the industry to be viable as it was originally envisioned,” he said in the article. “We were envisioned as a crucial but not dominant part of the commercial imagery industry.”


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