EchoStar “bankruptcy the most likely outcome”
May 10, 2024
By Chris Forrester
EchoStar, the Charlie Ergen-owned pay-TV and satellite operator, is struggling. CEO Hamid Akhavan told analysts in the company’s post-results call with analysts that the company has $1.98 billion (€1.84bn) of debt maturing in November 2024, and is forecasting negative cash flows for the remainder of the calendar year.
Current trading is not helping. It reported a decline of 8.5 per cent for its Q1 core business with declining subscribers at Dish Network (down 348,000 subs) and Sling TV (down 135,000 subs). The total number of pay-TV customers served between Dish and Sling TV stood at just under 8.2 million accounts.
In EchoStar’s latest 10Q obligatory filing to the SEC the company stated: “Because we do not currently have committed financing to fund our operations for at least twelve months [there are] substantial doubt exists about our ability to continue as a going concern. We do not currently have the necessary cash on hand and/or projected future cash flows to fund fourth quarter operations or the November 2024 debt maturity.”
Akhavan told analysts that the company was working on a variety of avenues to refinance its obligations and improve its cash position. “The complex and delicate nature of this process demands time and confidentiality. We will certainly have more to share in due course.”
Ergen (executive chairman) for the second time was not present on the call with analysts.
A report from analyst Craig Moffett at MoffettNathanson states that he saw foresees EchoStar filing for bankruptcy in the next 4-6 months. Moffett admitted that EchoStar’s spectrum had an enormous value, but he did not see likely buyers such as AT&T, Verizon or T-Mobile being in a position to buy extra spectrum.
MoffettNathanson was highly negative on EchoStar, not for the first time, and wrote. “There are only three potential bidders, two of whom have badly overburdened balance sheets. There is no longer Dish itself as the marginal bidder. And the time value of money is a real consideration; a liquidation would potentially take a very long time. In fact, it’s not even clear that spectrum sales of any size would be allowed.”
Akhavan added: “Our recipe is very simple, candidly. Can we push the maturities [of our debt] out … so that we have enough cash to operate the business? We’re very bullish about our prospects for operating the business if we have the capital to execute that. While we’re working on that financing, we aren’t sitting on our hands.”
Also in negative territory is EchoStar’s cellular business (Boost Mobile) which lost 81,000 subscribers ending the quarter with 7.3 million subscribers and a 7 per cent decline Y-o-Y.