Dish Network to buy EchoStar’s assets
On May 20, Dish Network (DISH) announced that it will buy the satellite services business from EchoStar (SATS) for $800 million. The deal includes transferring certain EchoStar operations and assets like the BBS (broadcast satellite service) business to Dish Network in exchange for ~22.9 million Dish Network shares to EchoStar shareholders. The company acquired some of the EchoStar assets in 2017 to provide a better customer experience for its Dish TV and Sling TV customers.
The deal, which will be a tax-free transaction, is expected to close in the second half of 2019. The deal is expected to help Dish Network create operational efficiency and improve its free cash flows and EBITDA.
Pay-TV companies struggle to grow their customers
Dish Network’s latest deal to add EchoStar’s BSS business might help the company improve its retention rate and strengthen its subscriber base by delivering a better customer experience.
The company has lost subscribers in its pay-TV business for five consecutive quarters due to stiff competition and cord-cutting. In the first quarter, Dish Network lost 259,000 net pay-TV subscribers—worse than analysts’ expectations of a loss of 242,000 subscribers. The first-quarter losses more than doubled from the losses of 94,000 pay-TV subscribers in the first quarter of 2018.
Like Dish Network, Comcast (CMCSA) lost 107,000, while Charter Communications (CHTR) lost 145,000 residential video customers in the first quarter. Frontier Communications (FTR) also witnessed video customer losses of 54,000 in the first quarter. The two biggest wireless carriers in the United States, Verizon and AT&T (T) also reported video customer losses in the first quarter.