EchoStar, SBC Revise Terms of Alliance

Sep 21, 2005  •  Post A Comment

In a move that should answer a lot of questions about the fate of their partnership, EchoStar Communications and SBC Communications late Tuesday revised the terms of their strategic alliance, transforming it into an arrangement in which SBC is more clearly rewarded for bringing customers to EchoStar’s DISH Network satellite service.

Under the terms of the new pact, EchoStar will pay SBC a commission for each new subscriber who signs up for the satellite service. Under the previous agreement, inked in 2003, SBC assumed the costs of acquiring subscribers.

Analysts said the new pact gives SBC a clearer motivation to sign up customers for DISH Network service, which could help boost the satellite company’s growth. However, EchoStar will see its subscriber acquisition costs rise as a result of the new arrangement.

The revamped alliance removes a cloud that has hung over EchoStar for months. Observers had wondered whether the EchoStar-SBC partnership would last much longer given SBC’s aggressive push to offer its own television service. SBC had made it clear that the previous partnership was not financially advantageous and that it would no longer aggressively push DISH Network service.