Satellite reunion creates a bit of breathing space

Charlie Ergen is getting the bandwidth back together. Some 15 years after the 70-year-old billionaire initially cleaved his satellite empire, he unveiled an all-stock deal Tuesday to reunite Dish Network, the $4.5 billion pay-TV operator, with the smaller EchoStar infrastructure business. It’s hardly the most compelling merger, but there’s at least a chance of extracting some benefit.

The 2008 spinoff failed to deliver on Ergen’s promise to “unlock additional value.” Dish has produced a 73% total shareholder loss since the split while EchoStar generated just a 27% return. The Nasdaq Composite Index (.IXIC) returned more than 500% over the same period, according to Refinitiv data.

Ergen’s renowned frugality means there will be limited savings. Joining the two companies he chairs will reduce costs by about $75 million a year, or less than 1% of their combined operating expenses and capital expenditures. The primary objective appears to be getting EchoStar’s $1.9 billion of cash onto Dish’s strained balance sheet as the latter tries to make better use of its hulking portfolio of wireless spectrum. Dish shareholders, who will own 69% of the enlarged entity, are issuing stock at a rock-bottom price for the privilege. If nothing else, though, the modest 13% premium they’re offering to EchoStar shareholders buys some valuable time. Reuters