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JetBlue To Buy Inflight Broadcaster For $41 Mln

Tue Sep 10, 2002 6:34 am

NEW YORK, Sept 9 (Reuters) - Discount airline JetBlue Airways Corp. (NasdaqNM:JBLU - News) said on Monday it would buy the in-flight broadcaster it uses on all its flights for $41 million cash.
Privately held LiveTV will become a wholly owned subsidiary of JetBlue, which said it also would retire $40 million of LiveTV's debt.

The deal is expected to close in the fourth quarter, pending regulatory approval, and is not expected to have an affect on JetBlue's earnings, company officials said.

JetBlue differentiated itself from other airlines when it launched in early 2000 by using all new planes equipped with leather seats and 24 channels of live television for each passenger.

JetBlue shares closed down 13 cents to $39.78 on the Nasdaq before the acquisition was announced.
 
Guest

RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Tue Sep 10, 2002 9:10 am

interesting. would love to know if liveTV was even profitable and if it was, what kind of ebitda it was doing...
 
Guest

RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Tue Sep 10, 2002 9:19 am

So I'm guessing F9 won't be impacted by this.
 
BA
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RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Tue Sep 10, 2002 11:06 am

F9 could always move to Dish Network if for whatever reason the LiveTV contract is canceled.

Dish Network does offer the same program as LiveTV does, but no airline has come up to them yet.

Regards
"Generosity is giving more than you can, and pride is taking less than you need." - Khalil Gibran
 
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mariner
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RE: JetBlue To Buy Inflight Broadcaster For $41 Ml

Tue Sep 10, 2002 11:14 am

I'd think that the F9 contract with LiveTV is an essential part of the deal. It gives LiveTV - and thus JetBlue - a nice source of extra income.

BTW, has anyone noticed the F9 route map and the JetBlue route map recently? Apart from one missing link - DEN/LGB - they make a lovely fit.

That, and PTV's!

cheers

mariner
aeternum nauta
 
txagkuwait
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RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Tue Sep 10, 2002 11:29 am

Dumb. Dumb dumb dumb.

Anyone remember PSA? Before USAir got ahold of them?

PSA was a terrific airline. They did all the right things. Great hostesses, nice aircraft, tons o' flights, and cheap tickets up and down the California corridor.

PSA decided the fact that they were making money in the airline business meant they should buy a car rental agency and some radio stations.

This is not exactly the same deal, but close enough.

JetBlue shows enough potential that I think you could say it appears their people know how to run an airline.

I don't think that being able to run an airline qualifies you, in any way, shape, or form to operate a broadcasting station of some type.

First question I would ask Neeleman is WHY?

In any business, but maybe especially in the airline business....you are well served to concentrate on the product and business you know and leave the extraneous bullcrap alone.

Just another deviation from the JetBlue business plan. I don;t know why. But I think it would worry me if I had any money socked away in JetBlue stock.
 
sllevin
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RE: JetBlue To Buy Inflight Broadcaster For $41 Ml

Tue Sep 10, 2002 12:35 pm

My concern is that, based on that, jetBlue is going to be spending 81 million dollars for LiveTV (paying $41 million for the company and retiring (paying) $40 million in debt). That's a lot of cash to be spending -- how much could they have been paying annually for LiveTV as a service?

Given all the other expansion that B6 needs to do if it plans to take on all the aircraft that have been ordered, I'm not sure burning this cash will turn out to be a wise move.

Steve
 
LV
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RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Tue Sep 10, 2002 1:53 pm

so my question is does Live TV have any customers besides JB?
 
DCA-ROCguy
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RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Tue Sep 10, 2002 2:13 pm

My concern is that, based on that, jetBlue is going to be spending 81 million dollars for LiveTV (paying $41 million for the company and retiring (paying) $40 million in debt). That's a lot of cash to be spending -- how much could they have been paying annually for LiveTV as a service? Given all the other expansion that B6 needs to do if it plans to take on all the aircraft that have been ordered, I'm not sure burning this cash will turn out to be a wise move. Steve

I'm with you and TxAgKuwait, Steve. Buying their inflight TV provider doesn't seem to me the wisest move. Neeleman hasn't made any major mistakes in the past, I wonder what his reasoning is? $81 million is a LOT of money for a small carrier.

TxAgKuwait--PSA is a good example, and of course Richard "Allegis" Ferris at United with the Hertz rental car purchase.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
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spinkid
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RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Wed Sep 11, 2002 3:51 am

I imagine it depends somewhat on what the jetBlue contract with LiveTV is and when it is up. jetBlue has built their entire service around offering LiveTV. I imagine they got a great deal from LiveTV to promote their in home products. But now that jetBlue is known for offering LiveTV when the contract came up for renewal again, LiveTV would really have had them in a good spot to up the ante on how much money they are making off of them. By purchasing them jetBlue doesn't have to face that problem in the future.


Interestingly the stock took a nice bump up today after this news was announced.
 
goingboeing
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RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Wed Sep 11, 2002 4:29 am

Jetblue is an airline, not a media company. $81 million ($41 million for Live TV and $40 million to retire debt) would have bought a lot of programming for several years. Their stock is way overpriced right now, and any bump is going to hurt anyone who bought it at it's current rate.
 
Kohflot
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RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Wed Sep 11, 2002 5:07 am

There are only two ways I can see them justifying this purchase:

a) Fitting all of their aircraft with LiveTV as a seperate company would cost more than the stock and debt they're taking on. Plus, they're able to manipulate the market for IFE to an extent.

b) LiveTV wasn't doing so well and was at risk of folding. This most certainly would have put a kink in jetBlue's plans.

My hunch is that today's stock jump wasn't so much because of the LiveTV announcement as it was the immaculate timing of an announcement that they're not going to seek a secondary offer (sell more shares of the stock to individuals) very soon. Adding more shares tends to dilute their value a little bit..
Ask why..
 
goingboeing
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RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Wed Sep 11, 2002 8:11 am

so...if LiveTV was on the brink of folding, and they were getting money from JetBlue as a customer, who's going to pay the costs to operate the network? Big mistake IMHO.
 
174thfwff
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RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Wed Sep 11, 2002 8:26 am

Goingboeing,

Jetblue actually went up 10.01% today! or up 3.98 to $ 43.76

These are quotes from their Press Release...

"LiveTV, LLC will become a wholly owned subsidiary of JetBlue Airways, operating as an independent unit that will continue to be managed by existing LiveTV management and marketed under the LiveTV name. The acquisition offers JetBlue, as LiveTV's principal customer, the opportunity to directly control this important part of the JetBlue product. "

"The acquisition is expected to be completed during the fourth quarter of 2002, pending customary government approval, and is expected to have no material impact to JetBlue's earnings per share over the next few years and to be mildly accretive to earnings thereafter. "

"About LiveTV:
LiveTV provides in-flight entertainment systems for single-aisle commercial aircraft, including live in-seat satellite television, XM Satellite Radio service, wireless aircraft data link service, cabin surveillance systems and Internet services. The airline industry's only true real-time, at-home entertainment experience in the air, Live TV's satellite TV system includes individual seatback monitors, armrest remotes and volume controls that allow passengers to select from 24 channels of DIRECTV® programming. For more information, visit LiveTV on the World Wide Web at http://www.livetvifs.com/. "

You can read the rest of the press release here http://www.nasdaq.com/asp/quotes_news.asp?selected=JBLU&symbol=JBLU%60&textpath=D%3A%5Cwww%5Cnasdaq%5Cnews%5Cen%5C2002%5C09%5C10%5CEN0000912057%2D02%2D0349500001158463%2Etxt&cdtime=09%2F10%2F2002+8%3A06AM

Copyright notice-You can post whole press releases, however I just took out the valuable information. This is not a copyright violation. Taking an article is different then a press release.
Brooklyn, Queens, Manhattan, Staten, Uptown, what now? Lets make it happen.
 
goingboeing
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RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Wed Sep 11, 2002 8:35 am

Under another handle on a different board, I posted pretty much why I thought JBLU was overvalued at $39 and I still believe that anyone who buys at $43 is going to be in for a shock. Basically, the stock is priced for perfection, and any drop anywhere isn't going to go over well with the investors over on Wall Street. Plus, in just under a month, the "lock up" period expires, and I fully expect to see a fair amount of "profit taking" at that time.

But the purchase of something that has nothing to do with the airline (that couldn't have been purchased somewhere else if LiveTV would have failed) doesn't sit well with me. How many peanut manufacturers did Southwest buy in their early years. After all, imagine the money they could have saved buy owning the company that was selling them peanuts. As Tex pointed out, PSA got into the rental car business, as did United. One's no longer in business, and the other is hurting pretty badly these days. I think if you're going to run an airline, you won't want to be running a TV service with yourself as your only client. Especially for $81 million dollars. If they're going to throw money around like that, they might as well install a first class compartment and serve food.
 
airwarrior
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RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Wed Sep 11, 2002 12:25 pm

I listened to the webcast and I believe David Neeleman is a genius! Any airline that chooses to install live TV on their plane in the future will buy them from jetBlue. I believe LiveTV will be one of the smartest things jetBlue ever did. I'm not an airline expert, just an armchair CEO. I was one of the few who supported the idea of jetBlue years ago when it was still in the planning stages. You laughed at me two years ago and you will probably laugh at me now but I have a gut feeling this was a brilliant move.
 
goingboeing
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RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Wed Sep 11, 2002 8:21 pm

Airwarrior,

I think it's a big mistake - here's why: Costs. There are costs involved somewhere...why else would Live TV have been $40 million dollars in debt? Part of JBLU's successs has been lower costs than their competitors. Bumping up the costs with a TV station is no different than the increase in their competitors costs created by First Class service. And I am sure that if someone wanted to buy TV's for their planes, Direct TV or someone else would work with them to meet their needs.
 
KROC
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RE: JetBlue To Buy Inflight Broadcaster For $41 Mln

Wed Sep 11, 2002 9:41 pm

Harris Corp (my employer), is selling its interest in Live TV, LLC. Here are a couple of links to articles that were distributed in email yesterday.

http://www.sec.gov/Archives/edgar/data/202058/000095015202006863/l96193ae8vk.htm

http://www.jetblue.com/learnmore/pressDetail.asp?newsId=140

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