Dish sale funds EchoStar in near term to develop business: CEO

EchoStar (SATS) announced it will sell its video distribution business, including Dish and Sling, to DirecTV for a nominal price of $1 and more than $9.7 billion of associated debt on the business. The deal would create the largest pay-TV provider in the US. EchoStar president and CEO Hamid Akhavan joins Seana Smith and Madison Mills on Catalysts to discuss what’s next for the company. “There are a couple of different angles for us to make this the right timing. First of all, I think from a financial perspective, you know, we had some maturities coming up. You know, we have always said we had a very asset-rich but liquidity-poor company in recent times. And now we address that in a very significant way,” Akhavan tells Yahoo Finance. “It's the right time for our content distribution business to kind of scale up, you know, that industry has changed. It's a very difficult industry. Now the programmers are going directly to the consumers [through streaming], and the erosion of the satellite-based distribution has been very significant in recent times… And I think this was the strategic right positioning for that corner of our business.” The CEO says the deal will make EchoStar more competitive with its peers in the “hyper-competitive” telecommunications industry. “There are only three players that own the entire telecommunication mobile communication of the United States,” referring to AT&T (T), T-Mobile (TMUS), and Verizon (VZ). The market “can afford to have a very solid challenger in the US.” EchoStar stock fell in response to the acquisition announcement. Akhavan says he “appreciate[s] that this was a very complex transaction by some accounts the most sophisticated, complex, and large-scale restructuring and refinancing and exchange all in one M&A in Wall Street's recent history. And so I think it takes a bit of time for people to unpack it.” He says the deal “funds us in the short-to-mid-term horizon for us to continue to develop the business.” The acquisition will require government approval, but the CEO is unconcerned that there will be regulatory hurdles. “There are no obstacles in our mind because the two companies coming together have lost [over] 60% of their customers since 2016” due to increased access to broadband internet. He says, “The attrition in our business just speaks to the fact that the market has choices, and the regulators actually want to have a stronger content distributor that can make the programmers offer smaller, more bite-sized, lower-priced packages to the consumers who are demanding it. So I think actually this will be a very easy decision for them. That's why that's what we hope and expect.” For more expert insight and the latest market action, click here to watch this full episode of Catalysts. This post was written by Naomi Buchanan.