Advanced Television

Plenty of upside for Ergen’s Dish Network

June 24, 2014

Charlie Ergen, the main shareholder (along with his wife) in both EchoStar and DBS broadcaster Dish Network, has been busy buying up broadcast transmission and spectrum rights for the past few years.

Indeed, while he – and rival DirecTV – spoke openly about their joint ‘need to merge’ their TV operations, we now know that it is wireless giant AT&T which is likely to acquire DirecTV, and its 20 million subscribers. Which makes the likelihood of some other well-pocketed telco as a likely candidate to buy into Ergen’s spectrum assets.

The latest, and much talked-about, suitor is telco giant Verizon.On June 23rd investment bank Citigroup issued a note to its clients and raising its advice on investing in Dish Network from ‘Neutral’ to ‘Buy’.

Verizon already operates a successful – and growing – multichannel business, FiOS, but is reported to want Dish’s valuable spectrum assets in order to expand its own 4G networks. The value lies not just in the spectrum’s bandwidth but in the fact that it is best suited to urban locations and even busy cities and towns. Indeed, some analysts are valuing Ergen’s spectrum as representing an untapped $17 BILLION in terms of assets.

But there’s a problem. Verizon coughed up a fortune ($130 billion) last year to buy Vodafone’s 45 per cent stake in Verizon’s wireless division. People are wondering whether Verizon can afford the sort of debt burden that buying Dish Network might mean.

Nevertheless, the banks are optimistic. Last Friday Dish’s shares were up $2.36 and with plenty of analysts citing a May 20 statement from Verizon’s CEO Lowell McAdam, saying: “Now, I think Dish has some interesting assets and there are things that a company like Verizon and Dish could do together, but I don’t feel that owning a satellite company is something that I’m finding intriguing at this point.”

Time will tell how enthusiastic he actually is.

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