By Phillip Swann
The TV Answer Man –@tvanswerman
Dish and Echostar are close to completing a merger which Dish Chairman Charlie Ergen believes will help the newly formed company build a nationwide 5G wireless network to compete with AT&T and Verizon, according to a new Wall Street Journal report. The article says the merger could be announced as early as today.
Update: Dish announced today (August 8) that it will merge with Echostar, pending federal regulatory approval
“This is a strategically and financially compelling combination that is all about growth and building a long-term sustainable business,” said , Chairman of the Board of both DISH Network and EchoStar. “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. 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.”
Semafor.com first reported last month that Ergen, the chairman of both Dish and Echostar, is considering merging the companies which have been separate entities since 2008. The article, penned by the business site’s Liz Hoffman, noted that Dish is deep in debt while Echostar, which runs Ergen’s TV set-top business, is basically debt free. Ergen could use the consolidation to create more stability for his holdings which could help him find financing for his 5G wireless business.
It’s unclear how the merger, which would have to be approved by federal regulators, would fortify the declining satellite TV business which is rapidly losing subscribers to cord cutting. But Ergen has said his company needs to diversify the business due to satellite’s shrinking sub base and that the wireless initiative is critical to that effort.
“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,” the WSJ article states.
It’s also unclear if the Dish-Echostar merger would affect a possible merger with DIRECTV. See this article for more information on that. The TV Answer Man will update this story if more information becomes available.
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— Phillip Swann