Dish’s Charles Ergen
Andrew Harrer | Bloomberg | Getty Images
Dish’s “Seinfeld” strategy appears to be over just like the actual show — with its finale a generally accepted disappointment.
In 2011, Dish co-founder Charlie Ergen first mentioned “Seinfeld” on an earnings call in response to an analyst question about his company’s gross assets. Ergen noted that a half-hour episode of the 1990s sitcom usually began with several plot lines without a clear direction, “But everything seemed to come together in the last two minutes,” he said. “And so I think in terms of where we’re going strategically, you’re just going to have to wait and see where it all comes together.”
On Monday, assuming regulatory approval, the conclusion was revealed.
EchoStarDish’s parent company sold the pay-TV provider to DirecTV for a nominal price of $1 and $9.75 billion in related debt to the business. Shares of EchoStar fell more than 11% on Monday.
Recent years have seen Dish try and fail to transition to a national wireless carrier, while millions of pay-TV subscribers ditch streaming services and carriers that include high-speed broadband, such as Comcast and Charter.
Dish and DirecTV have lost a combined 63% of their video subscribers since 2016.
“Times have changed,” EchoStar CEO Hamid Akhavan said in an interview with CNBC on Monday. “The content distribution industry is in decline, losing customers at a rapid rate.”
The company’s value in turn has plummeted.
When Dish and DirecTV the merger was discussed in 2014, DirecTV’s market cap was around $40 billion and Dish’s market valuation was over $28 billion.
DirecTV sold a year later to AT&T for $49 billion in equity value. Dish remained independent and lost almost all of its value as its business declined and satellite TV became increasingly anachronistic.
EchoStar and Dish they merged again earlier this year after the split in 2008. EchoStar was motivated to shed Dish and its debt as a $2 billion debt payment is due in November, CNBC reported last week.
Wireless gambit
When Ergen used to talk about Dish and its future trajectory, he would sometimes reach out and extend his fingers, using them as metaphors for different paths forward. For years, it had been trying to marry Dish’s pay-TV business with a wireless service, buying spectrum at auctions and regulatory authorities to allow its use.
Dish ended up acquiring Boost Mobile as a divestiture from T-Mobile for $1.4 billion in 2019. However, without a partner, it was difficult for Dish to find the capital for both its pay TV operation and creating a nationwide network to compete with AT&T, Verizon and T-Mobile — especially as the slow cash flow from satellite TV dwindles each year with the loss of millions of subscribers.
“We couldn’t feed [the wireless] business-wise,” Akhavan said Monday. “The company’s multi-directional focus was also a distraction for management.”
The actual series finale of “Seinfeld” was widely breaded compared to the best episodes of the series. It’s hard not to see this path for Dish as a similar disappointment.
WATCH: EchoStar CEO Exclusive CNBC Interview on Dish-DirecTV Tie-Up
