Grasshopper
10-02-2007, 12:45 PM
In classic EchoStar fashion, the company unveiled two big moves outside of normal business hours this week leaving industry press and financial analysts scurrying about to get details. Of course, we're talking about the company's agreement to buy Slingbox maker Sling Media for $380 million and the announcement that EchoStar may split into two separately traded companies.
After the dust settled from the initial boom, and the company's shares finished Tuesday up more than 6 percent, here's what some on Wall Street had to say about the news:
Bernstein Research's Craig Moffett: "The acquisition of Sling Media is a positive step ... hint(ing) at a differentiation strategy for DISH, wherein EchoStar subscribers will be able to take their TV subscription with them when away from home. DIRECTV has established HDTV as its point of differentiation. The MSOs are betting on broadband, and a triple play of services that the DBS providers cannot match. Until now, EchoStar has bet primarily on DVRs (and low prices) as the core of its marketing proposition. But DVRs are increasingly a commodity, and allow little room for differentiation. An 'anywhere' value proposition for consumers has the potential to position EchoStar's service offering as genuinely differentiated."
On the possible spin-off, Moffett added that the benefits are less clear. "Under the plan, EchoStar would spin off to current DISH shareowners its technology and certain infrastructure assets 'not considered core to DISH Network's subscriber business.' By implication, the majority of satellite fleet would remain integrated with EchoStar's DISH Network business. According to CEO Charlie Ergen, such a structure would allow each company to 'separately pursue the strategies that best suit its respective long-term interests.'"
Wachovia's Jeff Wlodarczak: "Ergen has long stated that he feels like the market has not given him any credit for his technology/fixed satellite services businesses, which mainly design and manufactures set-top boxes and provides satellite bandwidth to businesses. We believe this potential spin highlights Ergen's desire to expand that business materially and will allow him to create an appropriately valued currency to use for acquisitions such as the Sling Media (private) purchase. A separate company also helps eliminate conflict of interests between potential EchoStar's technology company (and new business they are trying to win) and the core sat TV business."
And Wedbush Morgan's William Kidd said he is excited about the company's acquisition of Sling: "We suspect that Sling's technology has been underutilized (and) its potential is far greater embedded in other devices than being sold as a standalone retail device. It could be a natural edge or simply an evolution for pay television providers to offer such place-shifted television to their subscribers. Such a move could also help deter subscribers from their increasingly reliance on internet-born media, such as YouTube and iTunes."
After the dust settled from the initial boom, and the company's shares finished Tuesday up more than 6 percent, here's what some on Wall Street had to say about the news:
Bernstein Research's Craig Moffett: "The acquisition of Sling Media is a positive step ... hint(ing) at a differentiation strategy for DISH, wherein EchoStar subscribers will be able to take their TV subscription with them when away from home. DIRECTV has established HDTV as its point of differentiation. The MSOs are betting on broadband, and a triple play of services that the DBS providers cannot match. Until now, EchoStar has bet primarily on DVRs (and low prices) as the core of its marketing proposition. But DVRs are increasingly a commodity, and allow little room for differentiation. An 'anywhere' value proposition for consumers has the potential to position EchoStar's service offering as genuinely differentiated."
On the possible spin-off, Moffett added that the benefits are less clear. "Under the plan, EchoStar would spin off to current DISH shareowners its technology and certain infrastructure assets 'not considered core to DISH Network's subscriber business.' By implication, the majority of satellite fleet would remain integrated with EchoStar's DISH Network business. According to CEO Charlie Ergen, such a structure would allow each company to 'separately pursue the strategies that best suit its respective long-term interests.'"
Wachovia's Jeff Wlodarczak: "Ergen has long stated that he feels like the market has not given him any credit for his technology/fixed satellite services businesses, which mainly design and manufactures set-top boxes and provides satellite bandwidth to businesses. We believe this potential spin highlights Ergen's desire to expand that business materially and will allow him to create an appropriately valued currency to use for acquisitions such as the Sling Media (private) purchase. A separate company also helps eliminate conflict of interests between potential EchoStar's technology company (and new business they are trying to win) and the core sat TV business."
And Wedbush Morgan's William Kidd said he is excited about the company's acquisition of Sling: "We suspect that Sling's technology has been underutilized (and) its potential is far greater embedded in other devices than being sold as a standalone retail device. It could be a natural edge or simply an evolution for pay television providers to offer such place-shifted television to their subscribers. Such a move could also help deter subscribers from their increasingly reliance on internet-born media, such as YouTube and iTunes."