EchoStar's (DISH) CEO Charlie Ergen announced he is pursuing the idea of splitting the company into two separate entities. One company would serve consumers and the other the wholesale technology sector.
Under the changes, Echostar's Dish Network and U.S. satellite-TV business would keep running like it is now, while the wholesale technology and infrastructure would be spun off. If the split happens, both companies would be publicly traded.
The major impetus of the move is its infrastructure and technology assets, which the company feels is undervalued by investors. The assets spun off would include its international operations, third-party fixed-satellite services, TV-set-top box business and uplink centers, among others.
Basically anything not considered key to its subscriber business would be spun off.
While shareholders liked the announcement and what it represented, there are several hurdles that must be overcome. The deal would have to be approved by the board, cleared by regulators and be ruled tax free by the IRS.
In reference to the Internal Revenue Service, Echostar has requested a ruling on whether splitting up the company would be able to be done tax-free.
Assuming the deal goes through, Ergen would serve as Chairman and CEO of Dish Network and the new business.
Ergen added if the business does split, it won't have any affect on the existing Dish Network's 13.6 million customers.
The company also announced it was acquiring Sling Media Inc. for $380 million.
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