Dish Chairman Says He Expects FCC Approval of Acquisitions in ‘Relatively Short Order’
Dish Network expects to get FCC approval in “relatively short order” for its acquisitions of TerreStar and DBSD, moving it closer to starting to build out a national wireless network, Dish Chairman Charlie Ergen said Monday. The FCC comment period ended Nov. 3 and if Dish gets commission approval, it could close on the purchases within 60 days, analysts said. Dish last week agreed to pay $114 million to Sprint to settle a legal battle tied to TerreStar and DBSD, it said Monday in an SEC filing. Sprint claimed it was owed $220 million by TerreStar and DBSD, and the settlement resolves the claims (CD Nov 7 p1), Dish said.
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If it gets FCC approval, Dish would also start discussions with chip suppliers and handset providers and partner with another company to launch a service, Ergen said. “I believe there is a path for us to go it alone, but that would not be my first choice,” Ergen said. Dish sought to forge partnerships before, including with rival DirecTV, but “there are a lot more people that we can partner with now and we're also a lot bigger company,” Ergen said. Ergen declined to comment on potential partners, but AT&T is among the telcos that resells Dish’s satellite service. The spectrum from the purchase of DBSD and TerreStar will likely be paired with the 700 MHz licenses Dish acquired in 2008 for $712 million.
There should be few roadblocks to Dish getting FCC approval because the spectrum is largely “clean” of the interference that plagued other applications, with the possible exception of some issues at the uplink, Ergen said: “It is about a clean a swatch of spectrum that you could ask for.” Dish would have to take “a big loss” to abandon plans for buying TerreStar and DBSD, and the acquisitions would strengthen Dish’s hand in mobile video, Ergen said: “We need to be more than a fixed video service and we need mobile video as well.” Dish’s investment in DBSD was valued at $1.28 billion as of Sept. 30, the company said. It also has funded $66 million of a $88 million credit facility that DBSD had been using since signing an agreement Feb. 1.
Dish also said it expects to file an appeal to New York State Court of Appeals after a Manhattan Supreme Court jury found The Walt Disney Co. properly collected $56 million in fees from 2007 to 2010 for the rights to carry four of its HD channels. At issue, was Dish’s requirement to pay fees to Disney under contracts that EchoStar, which spun off from Dish, signed with Disney in 2005. The contracts covered 12 Disney-related channels, including four HD channels it started offering consumers in 2007, including Disney Channel HD, Disney XD HD, ABC Family HD and ESPN News HD. Dish agreed to pay the fees, while pursuing a lawsuit, which was filed in 2008. Dish pulled the four HD channels from its lineup in 2010.
Dish’s Q3 net income improved to $318.9 million from $244.9 million a year earlier as revenue increased to $3.6 billion from $3.2 billion. Dish lost 111,000 net subscribers to end Q3 with 13.94 million. It lost 132,000 the previous quarter. Average per subscriber revenue increased to $76.99 from $74.36.
The successful launch of SES’ QuetzSat-1 Ka-band satellite to 77 degrees west Sept. 29 will provide Dish with 24 transponders in Q1 2012 to replace the EchoStar-8 satellite, the company said. Dish also will take over on Jan. 1 the last three of 32 transponders on Telesat Canada’s Nimiq-5 satellite at 72.7 degrees west, the company said. The EchoStar-14 satellite sustained solar array “anomaly” in September, reducing total power to the spacecraft, the company said. Dish also renewed a receiver remanufacturing agreement with EchoStar, extending it to Dec. 31, 2012, the company said.
Meanwhile, Dish sister company EchoStar reported revenue of $863 million for Q3, up 42 percent from the same period last year. EchoStar reported a net loss of $19 million for the quarter, compared to a net income of $5.2 million in Q3 last year. The loss was due in part to expenses related to the purchase of Hughes Communications, which closed over the summer, said EchoStar.