EchoStar Communications announced the acquisition of Sling Media for $380 million, news that comes as the TV vendor considers a plan to split itself into two publicly traded corporations, one of which would continue to operate its Dish Network satellite TV service.
The other company would control EchoStar’s technology and infrastructure assets. That would include its recently acquired Sling Media business.
EchoStar was an early investor in Sling Media, maker of the Sling Box that allows users to watch shows available on their home TV sets wherever they are via the Internet. Sling Media has made notable moves into the mobile arena, including a version of its service for Windows Mobile devices.
“With today’s increasingly mobile lifestyle, EchoStar’s acquisition of Sling Media will allow us to offer innovative and convenient ways for our customers to enjoy their programming on more displays and locations, including TVs, computers and mobile phones, both inside and outside of the home,” said Charlie Ergen, chairman and CEO of EchoStar. “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.”
Craig Moffett, senior analysts at Sanford C. Bernstein, called the Sling acquisition a positive step because Dish could differentiate itself from its satellite and cable competitors by offering customers the benefit of mobility.
EchoStar’s stock was up 6% on the news to around $44 per share.
As part of the acquisition, EchoStar’s CEO talked up the benefits of splitting the company in two.
“We believe separation of our consumer-based and wholesale businesses could unlock additional value. Each company would be able to separately pursue the strategies that best suit its respective long-term interests,” said Charlie Ergen, chairman and CEO of EchoStar, who would serve as CEO of both companies. “The spin-off transaction would also allow employee incentives to be tied to their respective company’s performance, and improve opportunities to effectively develop and finance expansion plans.”
EchoStar said it recently submitted a request to the Internal Revenue Service for a ruling as to the tax-free nature of the transaction.
Jon Lafayette is a reporter for TV Week, a sister publication of RCR Wireless News. Both publications are owned by Crain Communications Inc.
