Ergen Strikes Deal to Merge Dish, EchoStar

Charlie Ergen has struck a deal to merge his major holdings, Dish Network and EchoStar, a move aimed at giving him the financial flexibility to build a nationwide wireless network strong enough to take on the likes of AT&T and Verizon.

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, the companies said.

Current Dish shareholders are expected to own 69% of the combined company upon the deal closing, with EchoStar shareholders owning the remaining 31%.

The Wall Street Journal reported Monday evening that a merger between the two was imminent.

The CEO of EchoStar, Hamid Akhavan, is expected to serve as president and chief executive of the combined company upon the closing of the deal. Erik Carlson, the president and CEO of Dish, is planning to depart.

Dish has a market value of about $4 billion, while EchoStar’s is about half that.

A transaction will reunite Dish’s pay-TV business and fledgling 5G network with EchoStar’s satellite-communications infrastructure.

“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 Journal in a phone interview. He added that the deal will give Dish the financial flexibility it needs to compete in the next generation of wireless.

The billionaire telecommunications entrepreneur controls both companies, each of which contains different parts of an empire built over four decades. Dish serves millions of pay-TV and cellphone customers through brands including Sling TV and Boost Mobile and has amassed a cache of spectrum licenses to support its wireless ambitions. EchoStar runs a fleet of satellites that serve HughesNet home-internet users as well as business and government clients.

Ergen co-founded EchoStar as a satellite-television equipment distributor in 1980. In 2008, the company changed its name to Dish Network and spun off its technology arm as EchoStar.

The two companies have shifted assets over the years. Dish acquired certain assets in 2017 and struck another deal in 2019 to buy EchoStar’s broadcast-satellite business. Ergen, who stepped down as CEO of Dish in 2017, remains chairman of both companies.

Dish, a longtime presence in satellite television, has spent more than a decade laying the groundwork to be a major player in the wireless sector.

Ergen has said his company aims to pivot its operations away from a shrinking pay-TV service as cord-cutting accelerates. Dish has said it expects its overall 5G, or fifth-generation, wireless network to cost more than $10 billion to build.

Heavy spending on the new network tipped Dish’s free cash flow into negative territory last year, causing its debt to trade at distressed levels. Ergen in May said the debt market was essentially closed to Dish but hinted that the asset-rich company still had several options at its disposal.

EchoStar had $1.7 billion in cash on its balance sheet as of March 31. It continued to generate cash in the March quarter and is primed for more growth as it brings its new Jupiter 3 satellite online. The company had been set to report its second-quarter results Monday but recently delayed the release until Tuesday morning.

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.

Semafor last month reported that Ergen was exploring a deal between EchoStar and Dish.

Write to Lauren Thomas at [email protected] and Drew FitzGerald at [email protected]