Charlie Ergen Wants to Reunite His Telecom Empire Via All-Stock Merger of Dish Network and EchoStar

Billionaire satellite TV mogul Charlie Ergen wants to reunite his telecom empire, on Tuesday unveiling an all-stock merger of Network and EchoStar Corp.

“This is a strategically and financially compelling combination that is all about growth and building a long-term sustainable business,” said Ergen, chairman of both companies, in a statement. “Dish’s substantial past investments in spectrum and its wireless buildout, combined with EchoStar’s recent launch of Jupiter 3, are expected to significantly reduce near-term capex requirements.” Capex is short for capital expenditures.

“The transaction is expected to generate significant cost and revenue synergies, and the strong asset portfolio of the combined company paired with its enhanced free cash flow generation capability and strengthened capital structure are expected to drive long-term value creation for our shareholders and other stakeholders,” the mogul added.

EchoStar CEO Hamid Akhavan will serve as president and CEO of the combined company upon closing of the transaction, with Ergen serving as executive chairman. John Swieringa, president & COO of Dish Wireless, will be president, technology & chief operating officer of the combined company. Erik Carlson will continue to serve as president and CEO of Dish Network until closing of the transaction, “at which time he will depart the business,” the companies said.

The board of directors of the merged firm will consist of 11 members, namely seven Dish directors, three EchoStar directors, and Akhavan.

Following completion of the merger, existing Dish Network shareholders will own approximately 69 percent and existing EchoStar Corporation shareholders will own approximately 31 percent of the common stock of the combined company.

The transaction was negotiated and recommended by special committees of independent directors of both companies and unanimously approved by the boards of directors of both companies, the two firms said on Tuesday. “Upon closing of the transaction, EchoStar Corporation stockholders will receive 2.85 shares of Dish Network Class A common stock for each share of EchoStar Corp.,” they detailed. The exchange ratio represents “a premium of 12.9 percent to EchoStar stockholders as implied by the unaffected 30-day volume weighted average closing stock prices of the two companies on July 5, 2023, the last full trading day prior to media speculation regarding a potential transaction.”

The satellite TV firm (and budding telecom business) Dish Network previously had been engaged in discussions to merge with EchoStar, the satellite-based communications company. The two companies were founded by Ergen and split apart in 2008.

The deal, if it is completed, would help Dish as it seeks to traverse a difficult landscape for pay-TV companies. Dish reported in May that it has 9.2 million pay-TV subscribers, including 7.1 million satellite subs, and 2.1 million subs to its streaming Sling TV service. The company’s subscriber base peaked in 2009, when it had more than 14 million subs.

While a smaller business than Dish, EchoStar has better margins, and its existing telecom business could be useful as the company tries to pivot toward becoming a wireless provider. Dish had been buying up wireless spectrum for years, and cut a deal with the DOJ to help get Sprint’s merger with T-Mobile over the line by becoming a fourth major wireless provider.

Dish in 2022 had revenue of nearly $4 billion, and income of $223 million. EchoStar had revenue of $2 billion and net income of $167 million.

Ergen, who controls both companies, is notorious for driving hard bargains. In the content space, that has meant contentious carriage negotiations. HBO, for example, was absent from Dish from 2018 until 2021; Univision was pulled from Dish systems for nearly a year in 2018-2019; and Disney networks, including ABC and ESPN, went dark last year in a contentious public dispute.

Ergen (who was kicked out of a Lake Tahoe casino for counting cards at a blackjack table) also drew the ire of major TV networks for launching a DVR that could automatically skip commercials.

Even though Ergen controls both companies, there is no guarantee of a deal. Rupert Murdoch last year proposed a recombination of his media companies, News Corp. and Fox Corp., but called the deal off after receiving pushback from outside shareholders.