Directv’’s termination of its deal to merge with EchoStar, apparently because EchoStar bondholders did not approve, means EchoStar continues to face key questions about its future.
Of course, so do most “cable TV” networks, as Comcast plans to spin off most of its “cable networks” while Warner Brothers Discovery also has said it is studying the issue. And while Disney has said it is not considering such a move, the logic of consolidating assets in a declining industry is fairly clear.
Observers might note that Disney’s cable network revenue (based in part on ESPN) is arguably stronger than Warner Brothers Discovery and Comcast cable networks. The point is that both subscription TV content networks and distribution companies (satellite, cable, telco) are under pressure.
A new financing deal means EchoStar will be able to make a roughly $2 billion worth of debt payments in November 2024.
The longer-term issue is what the company can do to create a plan for growth, as the firm is squeezed between a declining satellite TV business and big capital investments required for its mobile network, not to mention operational execution of the mobile business.
In the first nine months of 2024, for example, more than 65 percent of total revenue was generated by the satellite TV business, while operating income was generated only by TV and satellite services.
It is worth noting that CEO Charlie Ergen has led his companies through a variety of pivots. In the 1980s, EchoStar transitioned from a small retail store selling “television receive only” satellite TV systems to become a leading manufacturer and distributor of such hardware.
In 1996, EchoStar launched Dish Network, its direct broadcast by satellite system, which quickly became the fastest-growing satellite TV service in the United States.
The company developed related business units providing satellite services including satellite uplink and transponder usage for television and other satellite users.
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EchoStar established EchoStar International Corporation to provide satellite-related services throughout Europe, Africa, the Middle East, Australia, and Asia.
In recent years, EchoStar has pivoted towards building a nationwide 5G network as the long-term growth engine, replacing the subscription TV business.
EchoStar's wireless spectrum assets are valuable and potentially undervalued, though the ability of the most-likely buyers to acquire it anytime soon is in question. Some have valued Dish spectrum at as much as $58 billion, for example.
EchoStar owns Hughes Network Systems, which provides broadband and satellite services to businesses and consumers, and might be sold.
EchoStar owns satellite infrastructure that possibly could be monetized as well.
The merger would have allowed EchoStar to offload approximately $9.75 billion of its roughly $20 billion in debt.
The deal failure does not affect TPG's acquisition of the remaining 70-percent stake in Directv from AT&T, which is expected to close in the second half of 2025.
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