Exclusive: Pandemic hurt Orby TV’s ability to raise new funds, CEO says

A last-minute funding deal fell through, leaving the company in an extremely difficult position.
(Image: Orby TV / Graphic: The Desk)

The ongoing coronavirus health pandemic hurt satellite TV startup Orby TV’s ability to raise additional funds needed to keep the service going, the company’s chief executive said in a mass e-mail to family, friends and employees on Monday.

The e-mail, a copy of which was obtained by The Desk from a source close to the company, said Orby TV was close to raising an additional round of funding despite the pandemic, but the deal fell through at the last moment.

“We launched the Orby TV platform a little over two years ago,” Michael Thornton, Orby TV’s chief executive, wrote in the e-mail. “Needless to say, we could not have imagined the events that have taken place since, particularly over the last year.”

Launched in 2019, the prepaid satellite TV service offered a mixture of general entertainment, news and lifestyle channels starting at $40 a month.

There was a significant upfront cost to the service, with customers being asked to purchase at least one satellite TV receiver at a cost of $100 per receiver (or $200 if they wanted a receiver with a built-in DVR). Installation of a satellite dish and over-the-air antenna cost extra, though Orby TV offered a cheaper, self-installation kit for tech-savvy customers, and professional installation was often discounted for new customers.

Despite the upfront cost, Orby TV promised customers would quickly realize their savings over the long-term compared to more-expensive, offerings from traditional cable and satellite companies.

On Monday, Thornton wrote that the strategy worked well and that he was “extremely proud of what we were able to accomplish given the market headwinds, and still firmly believe Orby TV served an underserved segment in the pay television landscape.”

“That said, we came to an inflection point and needed to make some hard decisions,” he wrote.

Orby TV launched with the financial backing of an investor that Thornton often refused to identify by name, instead describing it simply as a “large pension fund.”

That money helped Orby TV land a deal with Eutelsat, a European telecommunications firm that leased transponder space on one of its North American satellites. The lease meant Orby TV didn’t have to launch and maintain its own fleet of satellites.

The investment also helped Orby TV secure content distribution agreements with AT&T (WarnerMedia), ViacomCBS, AMC Networks and A+E Networks — programmers that offer general entertainment channels without costlier sports and news networks.

Both moves helped keep prices low for customers: Orby TV only charged $40 a month for a base package of channels, with customers able to upgrade to a higher tier of programming for an additional $10 a month. Unlike other companies, Orby TV didn’t charge customers who wanted service in more than one room, and local channels were always free to receive with an included antenna, even if customers stopped subscribing to a pay TV package.

Orby TV officially rolled out to customers in September 2019, and it quickly forged partnerships with Best Buy and Target to allow customers to buy receivers in brick-and-mortar stores (the same hardware was also sold through Orby TV’s website). Those retail partnerships gave Orby TV greater reach to prospective customers while also providing the startup a sense of legitimacy.

A few months later, the first reported cases of COVID-19 made international headlines. It was just a matter of time before the virus came to the United States.

“Operating a business during a pandemic, as many of you know, was more difficult than any of us could have envisioned,” Thornton wrote. “Regardless, we were able to adjust quickly to the changing marketplace and achieve numbers we had set for ourselves before the COVID-19 virus appeared.”

But the pandemic hurt Orby TV’s ability to raise more capital from additional investors because the company’s executives couldn’t travel or make in-person presentations, Thornton said.

Despite this challenge, Orby TV was on the brink of securing an additional round of funding last autumn, but the round “suddenly collapsed without much notice,” Thornton wrote.

An investment group was hired to help reconstitute the round, but the money didn’t come through in time for Orby TV to remain afloat. In November, Orby TV laid off its regional territory managers and ended partnerships with third party companies, according to sources who spoke with The Desk on background.

Last month, Orby TV suddenly stopped activating new customer accounts and began refunding existing customers who had paid for service through March. On Monday, the company shut off its satellite signal completely.

In the e-mail, Thornton apologized to Orby TV’s investors, saying he regretted not being able to fulfill a promise to them to deliver the goods. But he said Orby TV still had many remarkable achievements during its short life, including its ability to go from concept to product in less than a year.

“Launching the first dedicated prepaid satellite television platform with a team of less than 20 full-time employees was no small task,” Thornton wrote. “And, we were able to bring everything together in less than a year, from funding to launch.”

Going forward, former customers are being encouraged to sign up for Dish Network. The satellite company has offered Orby TV’s former subscribers a special deal on programming and installation through mid-April.

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