Advanced Television

Court hears SES vs Intelsat arguments

April 20, 2022

Judge Keith Phillips opened his hearing into ‘Findings of Fact and Conclusions of Law’ in the SES vs Intelsat case on April 19th. Some 84 lawyers and other interested parties were present on a Zoom call, including Stephen Spengler – Intelsat’s CEO during the bankruptcy period .

A 158-page background to Intelsat’s defence was entered by the operator’s lawyers on April 18th into the court. The document argues that the 50/50 division of receipts from clearing the C-band frequencies by SES and Intelsat was “rejected by the FCC” and was followed, and subsequently “ordered”, by the FCC to clear 300 MHz of spectrum under the FCC’s own auction plans.

“Neither would share in each other’s risks or clearing costs, nor would they share in or otherwise receive market-based proceeds. Under the FCC’s order, each of them may individually receive fixed compensation, set by the FCC, if they successfully complete their own individually-required clearing work,” stated the Intelsat argument.

The Intelsat document added: “SES is poised to receive $4 billion from the FCC’s order, on top of having certain of its own clearing costs reimbursed. Not content with that—hundreds of millions of dollars more than SES would have received but for Intelsat’s refusal to acquiesce in the FCC’s prior offer to the satellite companies – SES insisted it was entitled to more than $400 million of what Intelsat may receive from its own clearing. Two years later, SES continues to try to jam the square peg of the FCC’s order into the round hole of the parties’ contract, using this litigation as a thinly veiled excuse to smear its principal competitive rival.”

Orin Snyder (acting for SES Americom) opened the formal hearing and robustly focussed on what he described as key elements of Intelsat evidence which he said were vital to the claim. He argued that Intelsat’s move was a blatant money grab.

He commented on the memo written by Bruno Fromont (Intelsat’s VP/Strategy, which included the ‘Come to Jesus’ phrase from Fromont) made after extracting “every last dollar” from the FCC, and referenced the plan which was to only inform SES that the 50/50 deal was over once Intelsat had squeezed the final amount from the FCC.

Snyder argued that the two key Intelsat witnesses, Fromont and David Tolley (Intelsat’s CFO), were not even called by Intelsat. He quoted their “damning texts and agreements,” and which were a recipe for liability.

“Look at the contemporaneous record,” he urged the judge. “Fromont strung along SES.”

Only now have Intelsat’s lawyers come up with the ‘after the fact’ arguments, Snyder suggested, adding that “Intelsat misrepresents the damaging texts from Fromont and Tolley” in its more recent statements.

Snyder reminded the court that that the FCC’s C-band compensation payment was a “phenomenal” sum, the most ever paid out by the FCC and unlikely ever to be matched.

Key to the problem for Intelsat, said Snyder, were the 12 weeks of liaison between Intelsat and SES after the FCC had ruled in favour of a public auction. That 12-week period makes this a textbook case, said Snyder, for an undue enrichment claim because Intelsat continued to attempt to “salvage” any parts of the private auction to the benefit of the parties. The parties were still working together during this key period, with the agreement very much still in place. The parties, therefore, continued to be bound by the consortium agreement which called for a 50/50 split. “Intelsat cannot explain this 12-week period,” argued Snyder.

The hearing wrapped and the judge’s ruling might take some time to appear.

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