On Tuesday, DISH Network announced that it entered into a definitive all-stock merger agreement with EchoStar Corp. This merger between the television provider and the satellite communications company, both co-founded and chaired by billionaire Charlie Ergen, is on track to rival AT&T and Verizon in the wireless sector.
Ergen initially launched his company as EchoStar Communications Corporation in 1980, with the intention of selling satellite television equipment. In 2008, the company rebranded as DISH Network and its technology arm was spun off as an independent company that maintained the EchoStar name. DISH now provides television and cellphone services to millions of customers through subsidiaries like Sling TV and Boost Mobile, and EchoStar maintains a growing satellite communications network.
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This transaction will reunite Ergen’s major holdings into one communications empire. As Ergen sees it, combining EchoStar with DISH’s growing 5G network will provide the financial flexibility to compete in the next-generation wireless market. “There are a lot of good companies in satellite and a lot in wireless, but not a lot do both of those things,” Ergen told the Wall Street Journal.
According to a statement from the companies, EchoStar shareholders will receive 2.85 shares of DISH Class A common stock for each share of EchoStar Class A, C, or D common stock, along with 2.85 shares of Dish Class B common stock for each share of EchoStar Class B common stock they own.
This merger marks Charlie Ergen’s latest effort to restore investor confidence in his wireless strategy, which he says is now adapting to the modern streaming-friendly environment. Reuniting asset-rich DISH and financially successful EchoStar will hopefully bring the network into a competitive running with other wireless companies like AT&T and Verizon, which has long dominated the market.
However, minority stockholders may take issue with the merger given the differing performances of the two companies in recent years. DISH shares have dropped by 46% this year amid mounting debt and loss of subscribers. EchoStar, in contrast, has increased by 41% this year, with further growth expected after a recent satellite launch.
But with the majority stockholders already on board, the transaction is expected to be completed by the end of the year, pending regulatory approval.
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