EchoStar plans to split up Dish, equipment businesses
NEW YORK - EchoStar Communications Corp., the second-largest US satellite television service, rose the most in more than three years after saying it may split the Dish network from its technology and equipment business.
The move would increase the value of the company and help finance expansion, chief executive Charles Ergen said yesterday. EchoStar could spin off set-top box designs, manufacturing, international assets, and some satellites.
"There's a huge asset base that's not being valued appropriately," said April Horace, an analyst with Janco Partners in Greenwood Village, Colo. "What they're trying to do is unlock value." Horace is reviewing EchoStar and may assign a rating to the shares.
A split would probably reignite speculation that part or all of Englewood, Colo.-based EchoStar may be sold, said Sanford C. Bernstein analyst Craig Moffett. The possible spinoff comes after EchoStar agreed Monday to buy Sling Media Inc. for $380 million, adding a service that lets people control home systems remotely. The acquisition is a "positive step," he said.
EchoStar advanced $2.82, or 6.8 percent, to $44.14 in Nasdaq Stock Market trading, the most since August 2004. The stock has risen 16 percent this year.
Letting Dish users access programming remotely "has the potential to position EchoStar's service offering as genuinely differentiated," Moffett, ranked the top cable analyst by Institutional Investor magazine, said in a note to investors yesterday. He rates the shares "underperform."
A split would also allow Ergen to keep a company to run if he were to sell the Dish business, Spencer Wang, an analyst at Bear Stearns Cos., said in a note yesterday. Wang rates the shares "underperform." 