With the EchoStar/DirecTV deal dead, the satellite industry wonders what’s next?
December 13, 2002
With the final nail in the coffin of the EchoStar/DirecTV deal, the speculation has begun. Will Rupert Murdoch, as is widely expected, make an attempt to buy DirecTV? Will other bidders appear out of the blue? Does DirecTV’s owner, Hughes, even want to sell now, or will it wait for more favorable market conditions? And what role will John Malone play?
Perhaps, the most intriguing question of all is what Charlie Ergen, the unpredictable entrepreneur who founded EchoStar, will do next? Left with $3.7 billion to spend after the failed merger attempt, Ergen, a master of understatement, has left everyone guessing when he said he would “continue to seek alternative, innovative ways to provide competition to the rapidly consolidating cable industry and to provide more choices for all consumers.”
It’s a financial soap opera that’s expected to play out rapidly in the coming weeks now that the key players are free to make new moves. Both companies avoided litigation when EchoStar agreed to pay a $600 million break-up fee to Hughes, and Hughes allowed EchoStar to walk away from a planned $2.7 billion purchase of its majority stake in satellite operator PanAmSat.
The deal was scuttled when both the FCC and the Department of Justice opposed the merger.
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