EchoStar Acquires Sling Media, Considers Splitting Company in Two

Sep 25, 2007  •  Post A Comment

EchoStar Communications said Tuesday it is considering separating the company into two publicly traded corporations, one of which would continue to operate its Dish Network satellite TV service.
The other company would control EchoStar’s technology and infrastructure assets. That would include Sling Media, which EchoStar agreed to acquire Monday for $380 million.
Charlie Ergen, chairman and CEO of EchoStar, would serve as CEO of both companies.
“We believe separation of our consumer-based and wholesale businesses could unlock additional value. Each company would be able to separately pursue the strategies that best suit its respective long-term interests,” Mr. Ergen said in a statement. “The spinoff transaction would also allow employee incentives to be tied to their respective company’s performance, and improve opportunities to effectively develop and finance expansion plans.”
EchoStar said it recently submitted a request to the Internal Revenue Service for a ruling as to the tax-free nature of the transaction.
EchoStar was an early investor in Sling Media, maker of the Sling Box, which allows users to watch shows available on their home TV sets wherever they are via the Internet.
“With today’s increasingly mobile lifestyle, EchoStar’s acquisition of Sling Media will allow us to offer innovative and convenient ways for our customers to enjoy their programming on more displays and locations, including TVs, computers and mobile phones, both inside and outside of the home,” said Mr. Ergen. “This combination paves the way for the development of a host of new innovative products and services for our subscribers, new digital media consumers and strategic partners.”
Craig Moffett, VP and senior analysts at Sanford C. Bernstein, called the Sling acquisition a positive step because Dish could differentiate itself from its satellite and cable competitors by offering customers the benefit of mobility.
“The benefits of a possible spinoff … are less clear,” he said.

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