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Charlie Ergen, the 70-year-old billionaire, has announced an all-stock deal to reunite Dish Network and EchoStar, his satellite empire that was initially cleaved 15 years ago. The merger, while not the most compelling, has the potential to extract some benefit.
The 2008 spinoff failed to deliver on Ergen’s promise of unlocking additional value, with Dish Network experiencing a 73% total shareholder loss since the split, and EchoStar generating a mere 27% return. In comparison, the Nasdaq Composite Index saw more than 500% returns over the same period.
Due to Ergen’s frugality, cost savings are expected to be limited. By combining the two companies under his chairmanship, costs will be reduced by approximately million per year, which is less than 1% of their total operating expenses and capital expenditures. The primary objective of the merger seems to be the transfer of EchoStar’s .9 billion cash onto Dish Network’s balance sheet, as the latter aims to improve its use of its wireless spectrum portfolio.
Dish Network shareholders, who will own 69% of the enlarged entity, are issuing stock at a low price for the privilege. However, the 13% premium offered to EchoStar shareholders provides valuable time.

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