Spy Satellite Companies Form Space Monopoly

via: TheIntelHub
Source: TheWired
July 24, 2012

Earlier this year, the spy satellite industry was hit hard by defense budget cuts.

For the top two commercial satellite companies, which survive largely by providing imagery to the Pentagon and U.S. intelligence agencies, the cuts left only enough money for one to survive.

Now budget austerity has forced the companies to merge together and create a new space monopoly with control over what we see from orbit.

On Monday, Colorado-based satellite firm DigitalGlobe announced it’s merging with Virginia-based competitor GeoEye in a stock and cash deal worth $900 million. The merger works out in DigitalGlobe’s favor, which keeps its name intact and whose shareholders will control 64 percent of the new company.

DigitalGlobe will also take over GeoEye operations. Best known for providing imagery for applications like Google Earth, the companies combined provide more than three-quarters of the U.S. government’s satellite images.

The company also has somewhat of a codependent relationship with the Pentagon. For one, the companies help serve a need for satellite images that the government’s own aging fleet of satellites can’t always fulfill.

Meanwhile, the companies are dependent on funding from Congress and the Pentagon’s National Geospatial-Intelligence Agency (NGA) in order to stay afloat. This year, that funding got cut — severely.

Earlier this year, the Pentagon announced it was pushing “significant reductions” for commercial satellite imagery for fiscal year 2013.

Although the total amount the government spends on reconnaissance satellites is kept secret, analysts expected losses up to 50 percent. This served as the catalyst for an austerity-driven merger war.

Continue Reading At: Wired.com

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