Charlie Ergen Nears Deal to Merge Dish, EchoStar
A deal between the companies, controlled by the billionaire, could be announced Tuesday
Charlie Ergen is nearing a deal to merge his major holdings, Dish Network DISH 0.66%increase; green up pointing triangle and EchoStar SATS 21.26%increase; green up pointing triangle, a move aimed at giving him the financial flexibility to build a nationwide wireless network strong enough to take on the likes of AT&T and Verizon.
A deal could be announced as soon as Tuesday, barring any last-minute snags, according to people familiar with the matter.
Precise terms couldn’t be learned, but the price could be a discount to where EchoStar stock closed following a surge of more than 20% on Monday ahead of the company’s earnings report. The price will still be a premium to where the shares changed hands in recent weeks, when they were around $17, the people said.
The current CEO of EchoStar, Hamid Akhavan, is expected to serve as president and chief executive of the combined company upon the closing of the deal.
Dish has a market value of about $4 billion, while EchoStar’s is about half that.
A transaction would reunite Dish’s pay-TV business and fledgling 5G network with EchoStar’s satellite-communications infrastructure.
Ergen, the billionaire telecommunications entrepreneur, controls both companies, each of which contains different parts of an empire built over four decades. Dish serves millions of pay-TV and cellphone customers through brands including Sling TV and Boost Mobile and has amassed a cache of spectrum licenses to support its wireless ambitions. EchoStar runs a fleet of satellites that serve HughesNet home-internet users as well as business and government clients.
Ergen co-founded EchoStar as a satellite-television equipment distributor in 1980. In 2008, the company changed its name to Dish Network and spun off its technology arm as EchoStar.
The two companies have shifted assets over the years. Dish acquired certain assets in 2017 and struck another deal in 2019 to buy EchoStar’s broadcast-satellite business. Ergen, who stepped down as CEO of Dish in 2017, remains chairman of both companies.
Dish, a longtime presence in satellite television, has spent more than a decade laying the groundwork to be a major player in the wireless sector.
Ergen has said his company aims to pivot its operations away from a shrinking pay-TV service as cord-cutting accelerates. Dish has said it expects its overall 5G, or fifth-generation, wireless network to cost more than $10 billion to build.
Heavy spending on the new network tipped Dish’s free cash flow into negative territory last year, causing its debt to trade at distressed levels. Ergen in May said the debt market was essentially closed to Dish but hinted that the asset-rich company still had several options at its disposal.
EchoStar had $1.7 billion in cash on its balance sheet as of March 31. It continued to generate cash in the March quarter and is primed for more growth as it brings its new Jupiter 3 satellite online. The company had been set to report its second-quarter results Monday but recently delayed the release until Tuesday morning.
Ergen has been trying to win back investor confidence in his wireless strategy. Dish shares have hit lows not seen in more than two decades this year as analysts question whether his project will pay off before billions of dollars of debt come due in the coming years.
Semafor last month reported that Ergen was exploring a deal between EchoStar and Dish.