Charlie Ergen is consolidating some of his satellite operations. DISH Network, his pay-TV arm, is buying his Echostar BSS (Broadcast Satellite Services) outfit for 22.9 million shares.
DISH President/CEO Erik Carlson saidL “This transaction brings those operations, including the BSS satellites, associated assets and key team members, in house and we expect those additions will create operational efficiencies and improve both free cash flow and EBITDA.”
The Echostar BSS business provides broadcast satellite services to DISH Network and other related activity including DISH’s Mexican subsidiary.
Mike Dugan, President/CEO of EchoStar said. “This transaction will allow EchoStar to focus our efforts on our high growth business of broadband services and other initiatives, while eliminating a negative growth component of our financial performance and the risk associated with providing services to a solitary customer.”
A joint statement said: “Each EchoStar shareholder as of the distribution record date will receive shares in a newly created subsidiary of EchoStar housing the BSS Business and other assets transferring in the transaction to reflect such stockholder’s pro rata ownership of EchoStar Class A and Class B common stock in the aggregate (“Distribution”). Immediately following the Distribution, a subsidiary of DISH will merge with and into such entity and each EchoStar stockholder as of the distribution record date will receive a number of shares of DISH Class A common stock equal to 22,937,188 divided by the total number of shares of EchoStar Class A and Class B common stock outstanding on the distribution record date.”
The move is designed to be tax-free to EchoStar and its shareholders, and is expected to close later this year.