# Ergen Talks Merger Timeline, 1Q Results



## Chris Blount (Jun 22, 2001)

EchoStar Chairman and CEO Charlie Ergen said it will be at least Fall before the company will know whether it can merge with DirecTV and Hughes.

Ergen, speaking during a conference call on EchoStar's first quarter results, said the Federal Communications Commission's review of the deal may not be wrapped up until at least September. Ergen said he expects the Justice Department's antitrust review of the deal to be complete before the FCC's decision.

Ergen said EchoStar remains confident the proposed merger will win approval from regulators. "The facts are strongly on our side," he said.

As for the first quarter, Ergen expressed disappointment with some of the financial numbers. He also said EchoStar finalized its StarBand write-down during the three-month period, leaving no investment in the satellite broadband provider on the books.

"We just don't see a path for a return on our money," Ergen said of StarBand. He added that EchoStar had a minority stake in the satellite broadband company, "which didn't allow us to drive the company in a direction we wanted to go."

EchoStar's DISH Network added about 335,000 net new subscribers during the first quarter, taking the service to approximately 7.16 million subscribers as of March 31.

First quarter revenue totaled $1.104 billion, a 28 percent increase compared to the $862 million for the corresponding period in 2001. The company had a net loss of around $39 million.

From http://www.skyreport.com (Used with permission)


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## Adam Richey (Mar 25, 2002)

Sounds like Charlie seems a little TOO confident. I want this merger to go through (with guidelines of course), but he seems to think that he's good to go, but all this government stuff has to get out of the way first. I'm reminded of a saying. "Don't count your chickens before they are hatched."


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## lee635 (Apr 17, 2002)

I suspect he's being publicly confident and privately guarded. What CEO at his level in the game would ever take a leap without an exit strategy?


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## minnow (Apr 26, 2002)

How does E* continue to lose money quarter after quarter and still stay in business. 39 million net loss !!! Just imagine the net loss if the merger goes through !! 39 million for 7 million customers, so we're lookin at 150 million for 25 million customers ?


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## Frapp (Apr 23, 2002)

> _Originally posted by minnow _
> *How does E* continue to lose money quarter after quarter and still stay in business. 39 million net loss !!! Just imagine the net loss if the merger goes through !! 39 million for 7 million customers, so we're lookin at 150 million for 25 million customers ? *


I have wondered this fact since the Dish Network started. To make matters more hard to believe, Ergan and DeFranco are wealthy beyond belief.

Any business can have a growth time frame with loss time figured in, but for six years in a row and at these amounts. ?

I love it when some of these companies ( Amazon.com is the worst ) use the "Pro Forma" scenario to show everyone "If we did not owe all of this, we would make this" .... What a crock .. Profit is profit .. loss is loss.

Try borrowing money from the bank by telling them you are operating at a profit on a "pro Forma" basis, they will show you the door.

All of the folks that did not sell their Dish stock in March of 2000 when it dropped severely ( $22.00 in one afternoon ) will never regain their loss.


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## AllieVi (Apr 10, 2002)

> _Originally posted by minnow _
> *How does E* continue to lose money quarter after quarter and still stay in business. 39 million net loss !!! Just imagine the net loss if the merger goes through !! 39 million for 7 million customers, so we're lookin at 150 million for 25 million customers ? *


It's not unusual for companies involved in new ventures to go for years without showing a profit. They survive because their business models convince people (banks, etc.) to provide the money to pay the bills. Bonds (loans to the company on which interest is paid) or sale of new stock bring in that money.

Few companies get through their early years without losses. Eventually, investors will want to see profits, though.


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## Kevin (Mar 27, 2002)

It's amazing to see how they can gain 335,000 new subscribers and still lose millions of dollars. The cost to operate the company must be ridiculously high, or there must be a high churn rate. Ergen better hope that the merger, if it goes through, does something to turn his company around or else Dish Network is done for.


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## Karl Foster (Mar 23, 2002)

When you bring on hundreds of thousands of subscribers, charge them nothing for equipment that obviously costs something to produce, and charge them only $9 per month for programming, you can't make much money from them. The profit margins may improve when the $9 subscriptions go up to $40 per month.


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## Scott Greczkowski (Mar 21, 2002)

I expect the number of people paying $9 a month to cancel their service when the $9 a month deal is done. 

Thats gonna be quite a price increase when their term is done.


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## Richard King (Mar 25, 2002)

> When you bring on hundreds of thousands of subscribers, charge them nothing for equipment that obviously costs something to produce, and charge them only $9 per month for programming,


The problem with this statement is that those who took part in the "I Like 9" promotion PAID for their hardware. Under "I Like 9", as opposed to other promotions, no hardware reimbursements were made to the installing dealer from Echostar. Every customer I signed up for the program paid a minimum of $199 for their system. In reality, the only difference between the "I Like 9" promotion and the other promotions is that the discounts are applied to programming rather than hardware and the "hit" for the promotion is spread out over 12 months rather than at the time of installation.


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## AllieVi (Apr 10, 2002)

The date when E* becomes profitable will be pushed WAY into the future if the merger happens. Since the E* and D* systems aren’t compatible, lots of customer equipment will have to be replaced to realize the merger benefits. Assuming a total cost per E* account averaging only $300 (free replacement receivers/PVRs, antennas, switches, and installer visits), that merger expense alone would currently be $2 billion (based on about 7 million accounts). The actual cost would probably be well above $300/account.

If a new broadcast standard that Charlie mentioned in the December “Chat” is put in place, add the cost of replacing D* equipment, too.

To sweeten the merger deal, Charlie said that he will invest two billion dollars over a couple years in satellite broadband that will allow a $30/mo subscriber rate.

Satellites and their launches cost about $250-300 million each and more will be needed for covering all 210 DMA’s.

Someone once said, “A couple billion here, a couple billion there and first thing you know you’re talking big money” (or words to that effect).

Charlie’s company may NEVER reach profitability at this rate. If nothing else, we customers should expect to see our bills rise to cover some of the costs.


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## EvanS (Mar 27, 2002)

> _Originally posted by AllieVi _Someone once said, "A couple billion here, a couple billion there and first thing you know you're talking big money" (or words to that effect).[/B]


can't remember which senator at a Congressional hearing...."next thin you know you're talking real money"


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## Mark Holtz (Mar 23, 2002)

Well, it appears that the DBS model for acquiring customers has changed. You're no longer going after customers who either have C-band or OTA (ie rural) and going after the actual cable customer who is dissatisfied with their cable system. So, the promotion programs is the "carrot" that pushes the switch.

I think that the credit requirements for Dish are a bit stronger than with DirecTV. In addition, Dish has a stringent payment policy for customers, resulting in less bad debt being sent to collections.


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## Nick (Apr 23, 2002)

Duplicate post deleted.


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## Nick (Apr 23, 2002)

Creative accounting ala A.A. can do wonders. Accelerated capital equipment depreciation and write-offs can keep E* in the (virtual) red for years to come.

I'm STILL waiting for Charlie's IQ test results. What's that you say? It's 1Q, not IQ? Why didn't you say so in the first place??!!

_"Never mind."_

Nickster :smoking:


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