EchoStar has sold another $2.6 billion in spectrum to Elon Musk’s SpaceX, giving the wireless and pay-TV company a stake of about 3% that is currently worth $11 billion.
The transaction, announced Thursday along with the company’s third-quarter results, builds on a $17 billion spectrum deal between the companies last September. On the SpaceX end, it makes Musk a bigger player in the wireless business.
In addition to the financials and the spectrum deal, the company announced that co-founder and chairman Charlie Ergen has returned to the CEO role of the Dish Network parent. After a pioneering run building a major pay-TV player in Dish, Ergen steered the company through its recent pivot to the wireless business before stepping back from a day-to-day exec role last year.
Dish, whose based of 7.2 million subscribers between traditional satellite pay-TV and the internet-based Sling bundle continues to shrink, is no longer a strategic priority for the company. Even so, the company’s rollout of Sling day and weekend subscription “passes” helped the streaming operator add 159,000 subscribers in the quarter. Overall churn of 1.3% for Dish set a new record for the company.
In the quarter ended September 30, total revenue slipped to $3.6 billion from $3.9 billion in the year-earlier period. Net losses widened to $12.8 billion from $141.8 million, mainly due to a $16.5 billion impairment charge related to spectrum sales to AT&T and SpaceX.
With Ergen’s return, former EchoStar CEO Hamid Akhavan has segued to the CEO post at the company’s newly formed investment arm EchoStar Capital.
During a conference call with Wall Street analysts to discuss the quarterly numbers, Ergen led off with bullish comments about the SpaceX position. Ergen and Akhavan both noted that their views were not based on privileged information about Musk’s privately held entity but on dealings with it on various ventures over the past decade.
“They’ve really been the best vendor we’ve worked with in space. They solve very complex problems for us, move very quickly,” Ergen said. “They don’t brag about themselves. They’re pretty understated. But they’re doing incredible things with space, whether it be launching or satellites or services.”
SpaceX was valued at around $400 billion last summer based on an insider share sale. It has been rumored for years to be preparing for an IPO, but for now Tesla remains the sole public entity in Musk’s portfolio. While Musk retains the CEO title, Gwynne Shotwell is the lead exec at SpaceX overseeing day-to-day operations.
“It’s pretty obvious that SpaceX is going to be the leader for the foreseeable future” in space exploration, Ergen said. “Their lead is actually growing. Their biggest competitor is China.”
Ergen, a maverick business figure who is never shy in front of a microphone, opened the call by saying, “It’s good to be back on the call, in a funny sort of way.”
Nevertheless, he went on, “We agree with the president,” who said in September that public companies should scrap quarterly calls and instead report earnings twice a year. “As soon as you finish one, you have to get ready for the next one,” Ergen sighed, warning that EchoStar “may, from time to time, not do quarterly calls,” though it will continue to file quarterly financial reports, per SEC rules.
