EchoStar Chief Says Satellite Deal Will Move Forward

Mar 17, 2005  •  Post A Comment

EchoStar Communications Chairman Charlie Ergen said Thursday he is confident EchoStar’s planned purchase of Cablevision’s lone satellite will go forward despite speculation that Cablevision Chairman Charles Dolan might try to scuttle the sale.

“The only thing preventing us from acquiring that satellite is not getting [Federal Communications Commission] approval,” Mr. Ergen said during an analyst call to discuss EchoStar’s 2004 financial results. “We intend to move forward with the transaction.” He added that he expects approval within three to six months.

EchoStar and Cablevision in February reached an agreement under which EchoStar was to pay $200 million for Rainbow 1, a satellite used in Cablevision’s struggling satellite business, Voom.

The sale agreement took place against the backdrop of an internal fight at Cablevision over whether to fund Voom. Charles Dolan has lobbied for continued Cablevision backing, while his son, CEO James Dolan, has sought to shut down the service. However, both sides have agreed to give Charles Dolan until March 31 to obtain financing for Voom, and some analysts have suggested Charles Dolan might try to cancel the sale of the satellite to EchoStar to ensure continuity of service.

Meanwhile, EchoStar reported strong fourth-quarter results, with the company generating a profit of $70 million, versus a year-earlier profit of $3 million, and posting a 28 percent increase in revenue to $1.9 billion. Driving the growth was the addition of 430,000 net new subscribers, bringing the total sub base to more than 10.9 million-a figure that has since grown to more than 11 million.

For the year, EchoStar posted a profit of $215 million, compared with $225 million a year ago, while revenue rose to $7.2 billion from $5.7 billion.

The company also announced that it uncovered “significant deficiencies” in its financial controls but declined to provide any detail on what those deficiencies were. However, the company said it was able to correct them without having to restate past financial results.