EchoStar won't sell willingly to rival

Ergen wants to keep firm independent of DirecTV

Joyzelle Davis, Rocky Mountain News

Published May 12, 2006 at midnight

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EchoStar Chief Executive Charlie Ergen stanched speculation that the operator of the Dish Network satellite TV service would be a willing seller to DirecTV, saying the company likes its independence.

Ergen, speaking on EchoStar's first-quarter conference call Thursday, responded to questions from analysts after DirecTV CEO Chase Carey said last week that the two rivals would have more luck today with regulators than they did in 2002, when EchoStar's proposed purchase was spiked on antitrust grounds. Since Chase's comment, EchoStar's shares rose 11 percent to $32.25 on Wednesday.

"My personal preference is we'd always remain an independent company and, you know, it would always be nice to run it and so forth," said Ergen, 53, who in 1980 co-founded EchoStar. A March 7 filing indicated he owns more than 214,000 shares of the company.

"But we're not suicidal as a company, and if there's opportunities out there that make sense," management will look at them, he said. He waved off questions about whether he'd similarly comment about a more merger-friendly Washington, saying he has "a bad batting average" with regulators.

Ergen alluded to a couple of potential growth areas for the company outside its traditional U.S. video market, including selling extra capacity from its expanded satellite fleet. EchoStar launched its 10th satellite in February and has signed pacts to build six more by 2009.

That would put EchoStar in competition with global fixed satellite-service providers such as PanAmSat, though "not on the kind of scale they do it, of course," he said.

Douglas County-based EchoStar has also been casting its eyes overseas for growth opportunities. Ergen wouldn't say what businesses it was considering, other than to note EchoStar "is one of the few companies in the world" that has expertise in everything from engineering digital video recorders to encrypting programming signals and launching satellites.

All of the company's 12 million subscribers are in the U.S., though it sells receiver systems to pay-TV operators and independent distributors worldwide. EchoStar last year won the right to use an orbital slot over Mexico, its first outside the U.S.

"Whether we can actually come up with an international deal that makes sense remains to be seen," Ergen said later at the company's annual shareholders meeting. "We've been spending a fair amount of time overseas."

The recent run-up in EchoStar's shares abruptly ended Thursday after the company reported slower subscriber growth of 225,000 net new customers in the quarter, 100,000 fewer than in the year-earlier quarter, due in part to stepped up competition from cable rivals that offer a bundle of phone, Internet and video services.

EchoStar also reported an unexpected increase in subscriber turnover to 1.57 percent. Some of that turnover was due to customers who dropped service after Dish pulled the Lifetime channel in a dispute over programming fees, Ergen said. Dish restored Lifetime to its service in February.

Even with Thursday's 4 percent drop in EchoStar's stock - the most in six months - the shares remain up 14 percent this year.

davisj@RockyMountainNews.com or 303-892-2514

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