EchoStar Communications
(NDAQ:DISH) shares jumped $2.77, or 6.7%, to $44.09 in afternoon
trading after the television provider announced that it would be
acquiring Sling Media and may spinoff its technology and infrastructure
assets, according to a
press release.
EchoStar
issued a statement Monday night indicating that it had agreed to
purchase Sling Media - which it already owns a stake in - for $380
million in cash and stock options. This will enable the company to
offer the Slingbox system to its consumers, which enables users to
watch and control home TV with a portable device such as a PDA or
laptop.
The company also indicated that it is considering
spinning off its technology and infrastructure assets. The spin-off
assets would include, among other things, EchoStar's award-winning set
top box design and manufacturing business, its international
operations, and assets used to provide fixed satellite services to
third parties, together with satellites, uplink centers and spectrum
licenses not considered core to DISH Network's subscriber business.
"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. 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," said Charlie Ergen, Chairman and Chief Executive Officer of
EchoStar.
Investors should carefully watch for a
10-12B filing
with the SEC that would detail any potential spinoff as it often
represents a great opportunity to profit. Meanwhile, the acquisition of
Sling Media should provide the company with an innovative new product
that can help it differentiate itself in an increasingly competitive
market. Combined, these events are great news for shareholders and
investors.
In the end, this is great news for shareholders who
have been waiting for an event to unlock value in shares that have
dropped over 10 percent from their 2007 highs. Combined, these factors
make DISH a stock
worth watching!
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