USA: Top US military officials, grappling with proposed budget cuts for commercial satellite imagery, said new government-owned satellites, manned planes and other equipment can fill the gap. “We believe we can manage that,” said Air Force General Robert Kehler, commander of US Strategic Command, which is responsible for US operations in space and cyberspace, referring to a decision to cut funding for orders for imagery from GeoEye Inc and DigitalGlobe Inc.
Kehler said the decision was budget-driven, but also reflected a sharp increase in the imagery provided by the government’s own satellites. “A lot of that has to do with the increase in government-provided imagery which has gone up pretty dramatically with the recent launches,” Kehler told Reuters after a speech to industry executives at a conference hosted by the Space Foundation.
The US government has not provided any details on expected funding levels for imagery, since both the commercial imagery contracts and government-owned imagery satellites are part of the Pentagon and intelligence community’s classified budgets.
However, industry sources said the Obama administration proposed cutting funding for the commercial imagery contacts to about USD 250 million from USD 540 million as part its budget proposal for fiscal 2013. The move is part of a broader plan to halve up to USD 7.3 billion in options included in the National Geospatial-Intelligence Agency’s (NGA) separate contracts with the firms, they noted.
The recommendation, which must still be approved by Congress, has raised concerns among some military commanders, who use the commercial imagery for daily military operations, and industry executives, who note the companies raised money to build new satellites on the basis of the expected orders.
A sharp drop in US government orders also raises questions about the long-term health of both imagery providers, for whom the government is the biggest customer, they said.
Shares of GeoEye and DigitalGlobe have dropped sharply on news of the proposed budget cuts, sparking speculation that one of the firms could exit the market or be taken over by a larger firm.
DigitalGlobe edged up 0.08 percent to close at USD 12.19 on the New York Stock Exchange, far below the 52-week high of USD 29.38 from May. GeoEye rose 0.8 percent to USD 22.56 on Nasdaq, less than half the 52-week high of USD 42.31 reached in July.
Asked about reported pushback against the decision by military commanders, Schulte noted that the overall level of imagery available to commanders would still increase given data being supplied by new government-owned satellites.
“They’re still going to get more, despite the cut in commercial imagery,” Schulte told Reuters at the conference.