WASHINGTON — EchoStar Corp. on May 20 agreed to sell its waning broadcast satellite services business to Dish Networks for $800 million, reshaping EchoStar as a company whose primary focus is on internet connectivity.
The sale includes nine satellites — half of EchoStar’s fleet when counting leased payloads — plus employees who handled satellite operations, associated properties, and licensing for an orbital slot.
Roughly 90 percent of EchoStar’s broadcast satellite services revenue comes from Dish contracts. EchoStar’s Satellite Services division, which counts broadcast revenue, shrank nearly 10 percent last year to $358 million, and had few avenues for growth, according to EchoStar. The business faced pressure from lower capacity pricing industrywide, compounded by difficulty attracting additional customers, since many saw Dish as a competitor.
EchoStar President and CEO Mike Dugan said in a statement that selling the business to Dish will “allow EchoStar to focus our efforts on our high growth business of broadband services and other initiatives, while eliminating a negative growth component of our financial performance and the risk associated with providing services to a solitary customer.”
The divestiture follows a “share exchange agreement” EchoStar made with Dish in early 2017, where EchoStar traded its EchoStar Technologies business for all of Dish’s Hughes Retail Preferred Tracking Stock.
EchoStar’s latest investments have been in Hughes Network Systems, which was also its largest revenue generator. Hughes counted for $1.717 million of EchoStar’s $2.091 million in revenue last year.
EchoStar has a satellite under construction with Maxar Technologies called Jupiter-3 that is designed to offer 500 gigabits per second of capacity for internet connectivity. The satellite is scheduled to launch in 2021, though the company has yet to announce a launch provider.
Hughes Network Systems also formed two broadband-focused joint ventures with Emirati satellite operator Yahsat, one dedicated to the Middle East and Africa, and another on Brazil.
Dish, through the sale, gains licensing rights to the at 61.5 degrees orbital slot where EchoStar-16 operates. Launched in November 2012, EchoStar-16 is one of EchoStar’s newer broadcast-focused satellites.
Dish said its purchase of Echostar’s broadcast business is structured to be a “tax-free exchange,” and should close in the second half of 2019.