EchoStar Communications bought Sling Media for $380 million, and said it is considering a split into two companies.
One will contain the service operations of the Dish Network plus the supporting satellite network.
The assets of the spun-off, second company would include EchoStar’s set-top box design and manufacturing business, its international operations, and assets used to provide fixed satellite services to third parties, together with satellites, uplink centers and spectrum licenses not considered core to Dish Network’s subscriber business.
“We believe separation of our consumer-based and wholesale businesses could unlock additional value,” said Charlie Ergen, who is both chairman and CEO of EchoStar. “Each company would be able to separately pursue the strategies that best suit its respective long-term interests. The spin-off 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.”
Ergen would be chairman and CEO of both companies.
The company has petitioned the Internal Revenue Service to discover if the transaction would be tax-free; the company said the deal is partially contingent on an IRS ruling that the split would be.
Sling Media’s Slingbox technology allows users to forward content from their pay-video service to a wide variety of viewing devices via a broadband connection.
One of the supposed disadvantages of DBS is that its satellite broadcast is not well-suited to provide rapidly responsive on-demand services or broadband services. The acquisition of Sling Media and its Slingbox, combined with the DVR units that Dish Network subscribers already have, could give EchoStar some interesting options for presenting on-demand services.
The Dish Network has more than 13.5 million U.S. DBS customers.
