Dish Network to Buy EchoStar's Broadcast Satellite Business -- 2nd Update
May 20 2019 - 3:08PM
Dow Jones News
By Patrick Thomas
Dish Network Corp. reached a deal to buy EchoStar Corp.'s
broadcast satellite-service business for about $800 million in
stock, as the company brings in-house operations it split off more
than a decade ago.
The Englewood, Colo., satellite-television provider on Monday
said the purchase, which includes nine direct broadcast satellites
and certain real estate, would create operating efficiencies and
improve its free cash flow.
Dish depends on EchoStar to operate the majority of its
satellites to deliver TV services to subscribers.
As part of the deal, expected to close in the second half of
this year, EchoStar shareholders will receive shares in the unit
being sold to Dish. Those shares would then be exchanged for 0.24
Class A shares in Dish, based on the amount of shares outstanding
in EchoStar as of last week.
EchoStar shares rose 3.6% in afternoon trading, while Dish
shares fell 8%.
EchoStar, which builds satellite technology, said its broadcast
satellite-service business provides telemetry, tracking and control
services to satellites owned by Dish. The company said that it was
having trouble growing the business and that Dish was its only
customer.
"This transaction will allow EchoStar to focus our efforts on
our high growth business of broadband services and other
initiatives," EchoStar Chief Executive Mike Dugan said in a
statement.
Dish and EchoStar separated into two public companies in 2008.
Dish acquired certain EchoStar assets back in 2017, such as its
software development group and uplink business. The deal also gave
Dish EchoStar's 10% stake in Sling TV.
Dish CEO Erik Carlson said the latest deal with EchoStar brings
key broadcast satellite operations, associated assets and personnel
into its fold.
The U.S. pay-TV sector has been shrinking in recent years as
price-conscious cord-cutters drop expensive cable and satellite-TV
connections in search of other forms of entertainment. Dish offset
some of those losses by launching online-only Sling TV in 2015,
though growth in this market has also slowed in recent months.
Dish lost 266,000 satellite customers during the three months
that ended March 31, while internet-based Sling TV added 7,000
customers, its smallest-ever quarterly gain.
Dish shares traded lower after the open Monday, but extended
those declines after Federal Communications Commission Chairman
Ajit Pai said he would recommend approving T-Mobile US Inc.'s
purchase of Sprint Corp.
Pivotal Research analysts downgraded their outlook for Dish
shares because an approval likely pushes back the timing for the
company striking a deal to sell its wireless spectrum licenses.
Dish, which is working to develop its own 5G network, has said
it has since 2008 invested more than $21 billion to acquire
spectrum licenses and make investments in entities.
Write to Patrick Thomas at Patrick.Thomas@wsj.com
(END) Dow Jones Newswires
May 20, 2019 14:53 ET (18:53 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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