個案資料

Termination of WorldSpace India’s satellite radio operations in 2009 was part of the restructuring efforts of the Maryland, U.S.-based parent company that had filed for bankruptcy in October 2008. As of June 30, 2008, WorldSpace Inc. (later 1 WorldSpace) had listed debt of US$2.1 billion and assets of US$307.4 million and had sought bankruptcy protection to help repay its debts. The parent’s two regional satellites, AfriStar and AsiaStar, and related ground assets had been acquired by U.S.-based Liberty Media, which also owned 40 per cent of satellite radio service provider Sirius XM Radio. The termination of WorldSpace raised a series of questions regarding early-mover disadvantages, business ideas, and pricing strategy. Analysts further extended the arguments to draw parallels with the satellite telephone service provider Iridium to question strategic decisions relating to the service-hardware mix, service provision and pricing, power of complementary products, power of substitutes, and consumers’ willingness to pay for incremental choice.

This is a case in business economics designed to help students appreciate basic concepts related to marginal cost pricing, pricing power of substitutes, the network industry, and capital structure decisions. It enables students to view the big picture while simultaneously paying attention to detail. Among other things, the case brings out the difference between the ex-ante projections of “willingness-to-pay” (stated preferences) and actual consumption patterns (revealed preferences). A series of questions is provided at the end of the case to elicit a rich class discussion on early-mover disadvantages, product-service mix, business models, debt, and consumer choice.

• Service Pricing
• Product-service Mix
• Early-mover Advantage
• Debt to Equity Ratio
• Incremental Choice
• Satellite Radio
• United States
• India