June 11, 2018
NEWS ANALYSIS — On the heels of 21st Century Fox, the Walt Disney Co. and Comcast collectively coveting U.K. satellite TV operator Sky, Denver-based EchoStar Corp. is also gazing across the pond.
Headed by Charlie Ergen, majority owner of Dish Network, EchoStar reportedly made an offer for Inmarsat, a London-based satellite telecommunications company with more than $1.4 billion in revenue in 2017.
While Inmarsat’s stock price jumped 14% following the undisclosed financial offer, the company considered it below its market value and rejected it.
“It very significantly undervalued Inmarsat and its stand-alone prospects,” the company said in a June 8 statement. “The board remains highly confident in the independent strategy and prospects of Inmarsat.”
Unlike Disney, Fox and Comcast’s interests in Sky’s 10 million pay-TV subscribers, Ergen is more interested in Inmarsat’s radio spectrum portfolio.
As media distribution increasingly becomes wireless, spectrum plays a key role in how that distribution channel works. Most major industries rely on wireless technologies that depend on spectrum access to function, including cellular, broadcast and satellite.
In the United States, regulatory responsibility for the radio spectrum is divided between the Federal Communications Commission (FCC), and the National Telecommunications and Information Administration (NTIA).
In 2017, Ergen reportedly spent $6.2 billion acquiring spectrum rights in government auctions – second only to T-Mobile. Dish reportedly owns about $35 billion worth of spectrum rights in the U.S., despite not yet operating a wireless network – as do Verizon, AT&T, T-Mobile, Sprint and Comcast.
Cellular distribution was one of the reasons Dish acquired the bankrupt Blockbuster Video chain in 2011. It had hoped to use the video store’s retail footprint to jumpstart branded and third-party mobile devices. That strategy stalled in 2013 when Dish shuttered the remaining Blockbuster-owned stores.
In 2015, Dish Launched Sling TV, the industry’s first online TV service. With more than 2 million subscribers, Sling TV represents Dish’s future as traditional linear TV declines.
With AT&T launching DirecTV Now, Charter operating Spectrum TV Plus, and Disney bowing ESPN+, Ergen has voiced interest in launching a wireless network by 2020 to better accommodate Sling TV to mobile consumers.
A year ago, Comcast did just that bowing Xfinity Mobile – a wireless service targeting the cabler’s 25 million broadband subscribers.
“Wireless is hyper competitive,” Dave Watson, CEO of Comcast Cable, said last year.“We will measure our success very differently than other wireless carriers. It will be designed to support the core cable business.”
Indeed, Ergen has similar designs involving Dish Network, and could license his spectrum portfolio or use it as leverage to entice merger and acquisition offers from third parties. Last December, Ergen stepped down as CEO of Dish to focus on wireless. Maybe that will include revisiting the Inmarsat offer.