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What is Ergen up to?

Charlie Ergen, co-founder and majority shareholder in Dish Network and EchoStar, has streamlined the business relationships between the two businesses, and in particular its growing broadband-by-satellite subsidiary Hughes Retail Group.

One of the strong benefits is that Dish now has end-to-end control over his Sling TV OTT system.

Shareholders liked the moves, and Dish shares rose 3.1 per cent on the day, while EchoStar rocketed 7.7 per cent.

But, savvy investors and more than a few investment bankers asked what Ergen’s end game might be? Analysts generally agreed that the moves made sense and simplified the structure of all the business entities involved.

Wells Fargo Bank equity analyst Marci Ryvicker , in a note, said she believed Ergen was cleaning these two companies for a reason, and that something potentially transformational could be on the way. Macquarie Capital praised the “smart move” by Ergen, who is also sitting on some $3 billion of cash reserves.

The various asset swaps do not come before shareholders for approval until later in March, so little can happen until then but even EchoStar in its presentation that accompanied the news alked about being able to pursue “strategic opportunities”.

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