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While ditching the last of its RSNs may have spared Dish Network from paying out hundreds of millions of dollars in carriage fees, the cost savings may not be sufficient to save the satcaster’s parent company from bankruptcy.
During EchoStar’s second quarter earnings call last week, chief financial officer Paul Orban acknowledged the company currently “[does] not have the necessary cash on hand” to fund Q4 operations or pay off the $1.98 billion in debt set to mature on Nov. 15. As of June 30, the company had $521 million in cash and cash equivalents at the ready.
Later in the call, EchoStar president and CEO Hamid Akhavan said his team was “having constructive discussions” with outside parties in a bid to refinance the debt. “We are fully cognizant and aware of how important it is for us to address our liquidity, and it is not a second or third or fourth priority for us,” Akhavan told investors. “We’re making progress.”
Citing confidentiality concerns, Akhavan did not offer further details on those talks, though he did suggest that EchoStar might use its spectrum assets as collateral.
EchoStar closed out the quarter with 8.07 million pay-TV subscribers, a head count that includes 6.08 million Dish TV customers, with Sling TV accounting for the remainder. The core satellite-TV service declined 12% from the year-ago 6.9 million subs, while registering a 33% drop versus the analogous period in 2020 (9.02 million). Revenue in the pay-TV segment fell 10% year-over-year to $2.68 billion.
The earnings report was greeted by a scathing note from MoffettNathanson analyst Craig Moffett, who teed off his missive to investors with a warning that EchoStar is “highly likely to go bankrupt, quite possibly by the end of the year.”
Other analysts are more sanguine, suggesting EchoStar should be able to raise sufficient funds on the back of one or more of its spectrum bands. (Should the company manage to kick the can down the road, it will still be on the hook for a $1.96 billion payment in the fourth quarter of next year, with another $6.41 billion due in the third quarter of 2026.)
Shortly after EchoStar completed its $26 billion acquisition of Dish, the company warned investors that its prospects were uncertain. In a 10-K form filed with the Securities and Exchange Commission on Feb. 29, EchoStar reported its debt load raised “substantial doubts about its ability to continue as a going concern.”
EchoStar’s financial struggles continue to mount despite all the money Dish has saved on RSN fees over the years. Back in 2019, Dish founder and former CEO Charlie Ergen said the satcaster was unlikely to re-up its expired distribution deal with the former Fox Sports RSNs, which are now grouped under the Bally Sports umbrella. “It doesn’t look good that the regional sports will ever be on Dish again,” Ergen said in July of that year, and he’s stuck to his guns. Dish has been RSN-free since dropping NESN at the end of 2021.
While Ergen acknowledged that dumping RSNs would likely alienate Dish’s most sports-crazed subscribers, he said that these consumers made up only a “small fraction” of its base.
“We will lose some customers,” Ergen told investors five years ago. “I hate it that we lose customers, but I also feel really good about the fact that maybe the vast majority of our customers can get a price break.”
Since Ergen walked away from the former Fox RSNs, Dish has lost 3.48 million subscribers, or 36% of its customer base. On the whole, that rate of attrition is somewhat more favorable than the overall losses absorbed by the legacy cable, satellite and telco-TV bundle, which in the last five years has shrunk by 41%. All told, 36.3 million U.S. households have cut the cord since the second quarter of 2019.