EchoStar’s Growth Aspirations Remain Tethered to Dish Network

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  Space News Business

EchoStar’s Growth Aspirations Remain Tethered to Dish Network

By PETER B. de SELDING
Space News Staff Writer
posted: 19 May 2009
03:12 pm ET






KOUROU, French Guiana — EchoStar Corp. told its investors not to expect a turnaround in the company’s efforts to expand its satellite capacity-lease business beyond sister company Dish Network, saying its association with Dish may even deter some prospective customers from purchasing capacity on the EchoStar fleet.

In a May 11 filing with the U.S. Securities and Exchange Commission (SEC), Englewood, Colo.-based EchoStar gave indications that the considerable unoccupied capacity it has in orbit is likely to remain so for some time, especially if direct-to-home television provider Dish Network struggles to maintain its subscriber base.

“Because the number of potential new customers is small and may be limited by our relationship with Dish Network, our current customer concentration is likely to continue for the foreseeable future,” the company said in the SEC filing.

Dish continued to account for 90 percent of EchoStar’s satellite-lease customer base. EchoStar said that for the three months ending March 31, its satellite-lease revenue totaled $102.3 million. Ninety percent of the business came from Dish, an even larger share than the same period in early 2008, when Dish and EchoStar were divided into two separate companies.

Satellite-lease sales to non-Dish customers in the first three months of 2009 totaled $10.4 million, down 33 percent from the same period a year earlier as some short-term contracts expired, EchoStar said. The lease revenue from Dish remained virtually unchanged.

EchoStar
operates six of its own satellites in orbit and has leased two others, the AMC-15 and AMC-16 satellites over
North America
, from SES of Luxembourg for 10 years. With near-term prospects dim for filling these satellites, EchoStar had already written down their value on its books.

On behalf of Dish, EchoStar has also booked substantial capacity on Telesat
Canada
‘s Nimiq 5 spacecraft, to be launched late this year, and on the QuetzSat-1 satellite whose construction and launch is being managed by SES. For QuetzSat, to be located at 77 degrees west longitude, EchoStar has leased 32 transponders for 10 years. Dish has agreed to take 24 of them, with Dish
Mexico
, a start-up direct-broadcast satellite company, scheduled to take the other eight.

To move the
Mexico
deal forward, EchoStar has agreed to provide Dish
Mexico
with $112 million in goods and services, including satellite capacity, over 10 years. EchoStar said in its SEC filing that it has already made payments equivalent to $26 million. Another $37 million is expected to be in the form of a cash payment to Dish
Mexico
.

EchoStar
said its EchoStar 12 satellite, used by Dish Network for television broadcasts, has suffered another solar array circuit failure in orbit. EchoStar 12 needs 22 of its 24 solar array circuits to provide sufficient power to operate as intended over 12 years. Eight circuits had previously failed wholly or in part. The most recent failure means the satellite cannot be used to its optimal capacity.

EchoStar
12, located at 61.5 degrees west, is the former Rainbow-1 satellite previously owned by Cablevision of New York. A Lockheed Martin A2100AX satellite, the satellite was launched in July 2003 and purchased by EchoStar in 2006.

EchoStar
reported net loss of $645,000 on total revenue of $480 million for the three months ending March
31, a
13.5 percent drop from the same period a year ago. The company’s principal business remains selling set-top satellite television boxes to Dish Network.