EchoStar has signaled that it may split into two publicly traded companies, one to operate its DISH satellite television service and the other to focus on new television-related technology.
EchoStar revealed the plan one day after announcing that it would acquire Sling Media, the privately held maker of the Sling Box, for $380 million. The Sling Box allows users to watch television that’s streamed from their homes to a computer or other Internet-connected device.
Charlie Ergen, CEO of EchoStar, said that any split in the company wouldn’t affect DISH network’s 13.6 million customers, but would allow the company to pursue multiple goals and unlock additional value. “This combination paves the way for the development of a host of new innovative products and services for our subscribers, new digital media consumers and strategic partners,” Ergen said.
EchoStar is awaiting an IRS decision as to whether a split could be done in a tax-free manner for both it and its shareholders. Current shareholders would receive shares in the new company. If the split occurs, the new technology company would pursue set-top box design and ventures to provide satellite services for other companies.
EchoStar was an early investor in Sling Media, along with Liberty Media and Goldman Sachs. Based in Foster City, CA, Sling was founded in 2004 and pioneered the concept of “location shifting” recorded television programs.
Ergen would continue to serve as chairman and CEO of DISH Network and fill the same roles with the new company. The board of directors would have to approve splitting the company and confirm that the spin-off would qualify as tax-free.