Billionaire satellite TV mogul Charlie Ergen has announced plans to merge his telecom empire, Network and EchoStar Corp., in an all-stock deal. Ergen, who is chairman of both companies, believes that the merger will facilitate growth and the creation of a sustainable business. He emphasizes that Dish’s significant investments in spectrum and wireless buildout, combined with EchoStar’s recent launch of Jupiter 3, will reduce near-term capital expenditure requirements. The merger is expected to generate substantial cost and revenue synergies, resulting in long-term value creation for shareholders and other stakeholders.
Upon completion of the merger, EchoStar CEO Hamid Akhavan will become president and CEO of the combined company, with Ergen serving as executive chairman. John Swieringa, president & COO of Dish Wireless, will take on the role of president, technology & chief operating officer of the merged company. Erik Carlson will continue as president and CEO of Dish Network until the transaction’s closing, at which point he will depart the business. The merged firm’s board of directors will consist of seven Dish directors, three EchoStar directors, and Akhavan.
Existing DISH Network shareholders will own approximately 69% of the common stock of the combined company, while existing EchoStar Corporation shareholders will own approximately 31%. The majority shareholder group has agreed not to vote DISH Class A shares for three years after the merger’s closure to prevent an increase in the group’s voting power. The transaction has been negotiated and recommended by special committees of independent directors from both companies and has received unanimous approval from their boards of directors.
This merger between Dish Network and EchoStar would benefit Dish as it navigates a challenging environment for pay-TV companies. Dish reported in May that it had 9.2 million pay-TV subscribers, including 7.1 million satellite subscribers and 2.1 million subscribers to its streaming service, Sling TV. The company’s subscriber base reached its peak in 2009, with over 14 million subscribers. EchoStar, although smaller than Dish, enjoys better margins. Its existing telecom business could prove valuable as Dish aims to transition into a wireless provider. Dish has been actively acquiring wireless spectrum for years and became a fourth major wireless provider through a deal with the Department of Justice to assist in the merger between Sprint and T-Mobile.
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In terms of financials, Dish achieved nearly $4 billion in revenue in 2022, with an income of $223 million. EchoStar generated $2 billion in revenue, with a net income of $167 million. Ergen, who controls both companies, is known for his tough negotiation tactics, particularly during contentious carriage negotiations in the content space. His approaches have led to disputes with major networks like HBO, Univision, and Disney networks, resulting in blackouts for Dish subscribers. Ergen also faced criticism for launching a DVR that automatically skipped commercials.
Despite having control over both companies, a deal between Dish Network and EchoStar is not guaranteed. Rupert Murdoch previously proposed a recombination of his media companies, News Corp. and Fox Corp., but ultimately canceled the deal due to resistance from external shareholders.
