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EchoStar Now DISH Network — Spins Off SlingBox, Set-Top Biz

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dishnetwork.jpegEchoStar, the satellite broadcasting company, is finally changing its name to DISH Network, according to a filing with the SEC. Why the change? EchoStar wants its name to truly reflect its true business. It is also planning to spin off some of its businesses, and that spin-off will be called EchoStar Holding Co. (EHC), a move we had mused about earlier. Charlie Ergen is going to be chairman and CEO of both companies. EHC had sales of over a billion dollars and a profit of about $32 million for first six months of 2007, on a pro forma basis.

EHC will primarily have two lines of business:

Set-top boxes: EchoStar has a hardware business that makes set-top boxes that are sold primarily to DISH Network, but also to some international customers. In 2006, this division shipped about nine million set-top boxes.
In October, EchoStar acquired Sling Media for about $380 million, and Sling Media is going to be part of EHC.

We believe our separation from ECC may enhance our opportunities to sell set-top boxes to a broader group of multi-channel video distributors. Historically, certain multi-channel video distributors have perceived us as a competitor due to our affiliation with ECC.

In other words, don’t be surprised if the company starts selling boxes to cable operators and other DBS companies.

Fixed Satellite Services: EchoStar owns (or leases) nine satellites and seven digital broadcast centers. It also has a fiber-optic network that has points of presence in 150 cities. This could mean that the company is going to start leasing capacity to other players, not just EchoStar.

The spin-off certainly sets up interesting scenarios: For instance, DISH can now be easily gobbled up by AT&T, though their deal is supposedly on the rocks. Another option is that DISH could aggressively bid on 700 MHz wireless spectrum, win some spectrum, and then offer some sort of a new broadband-enabled satellite TV service. A lot to think about, and of course a reason to make some calls.

21 Responses to “EchoStar Now DISH Network — Spins Off SlingBox, Set-Top Biz”

  1. “In other words, don’t be surprised if the company starts selling boxes to cable operators and other DBS companies.”

    They might very well be planning to do just that – but they have better chance selling those boxes in reatil stores (as the FCC is pushing for) than seling to Cable companies directly. That’s a terrible business – just ask CSCO (scientific atlanta), MOT, Digeo (owned by Paul Allen who also owns Charter), TiVo, Samsung, and the rest of the bunch. Making money on STBs is a tough business.

    Echostar’s STB sales have been primarily to their customers – selling them to other operators is a whole differnt thing. Cable companies cherry pick STB components – and have it delivered by differnt vendors – that’s how they keep control over their STBs (it is “their gateway, and theirs only”, into the home), an expereience all too familar to everyone from MOT to TiVo.

    Missing here in this post is the TiVo litigation with Echostar – and most likely the catalyst for spinning off the STB business – and subsequently the primary driver for the Sling acquisition.

    OM as you have suggested, there’s more to this spin-off story … I hope you are poking at the right places.

  2. So it will be waiting for everyone in the morning? =^)

    The “broadband-enabled Satellite TV service” sounds intriguing, but a DISH Network bid on spectrum wouldn’t be the only way to get there, would it? After all, if Google wins the auction, couldn’t DISH rent the spectrum from them? And if AT&T wins the auction and then buys DISH, couldn’t they do an all-in-one service as well?

    If it leads to a DVR that can download and play back H.264 podcasts, too, I’m all for it. (Or are we going to have to wait for DivX 7, since that’s likely going to support H.264 playback?)