IT'S OFFICIAL! The merger is over...

[Greg Bimson]

http://biz.yahoo.com/prnews/021210/detu006_1.html

Lifted from the other forum....

[Scott Greczkowski]

Greg you missed it on the front page. :)

http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=dish&script=410&layout=-6&item_id=362779

Big news. No wonder why Charlie was so depressed last night.

[dmodemd]

Hmmm... since we all just paid a big chunk of our bills to DirecTV, can we switch and get a credit? ;)

[Scott Greczkowski]

Actually if you read the new release Charlie is writing off the expense.

And I am suprised that Dish is not buying PanAmSat like they origionally agreed on. (or am I reading that wrong?)

[Frapp]

Originally posted by Scott Greczkowski
Greg you missed it on the front page. :)

http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=dish&script=410&layout=-6&item_id=362779

Big news. No wonder why Charlie was so depressed last night.

Let`s break this down into simplistic terms, shall we ?

Subscribers: Get ready for programming price increases

Dealers: Get ready for a whole new breakdown of chargeback fee`s and stipulations as to why you can loose your activation commissions :(

[Win Joy Jr]

Originally posted by Scott Greczkowski
Actually if you read the new release Charlie is writing off the expense.

That is CASH being spent. Look for them to make it up somewhere...

[jeffcarp]

This expense will come off the profits of shareholders, by reducing retained earnings. They can't just pass the fee onto customers. They still have to compete.

[Owner of a TV with no \"Off\" button]

GM is keeping Hughes including PanAmSat

[Scott Greczkowski]

I want to know how Echostar got out of buying Panamsat. Thats a BIG story in itself.

Dish now has a LARGE cash reserve because of all this, I wonder what they can do to push ahead?

[jeffcarp]

The easiest way to reach an agreement is for both sides to give up something. If they do, then they avoid a lengthy court battle over the contract, which would further tie up Directv for years to come.

[Claude Greiner]

Jeff,

I think you hit the head on the nail. We all knew Charlie had no interntions of paying the $600 Million, but was required to buy PamAmSat no matter what.

Charlie started to have second thoughts about PamAm, so therefore instead of having to buy PamAmSat and then battle it out in court and have to possibly pay $600 Million to GM, he decided it was best just to pay $600 Million to walk away from the whole thing.

Look at it this way, the $700 Million dollers for the merger, can now be written off on this years books, instead of next year.

Eitherway, Charlie still came out the winner in this whole thing, he got into Radio Shack, and Walmart, he got 2 professional sports packages, and then got a look at Directv's books :)

[Win Joy Jr]

Originally posted by Scott Greczkowski
Dish now has a LARGE cash reserve because of all this, I wonder what they can do to push ahead?

I do not have the info available, but the money raised for the merger also included money to buy PanAmSat. They may have to return some of the money raised...

[Win Joy Jr]

Originally posted by Claude Greiner
Eitherway, Charlie still came out the winner in this whole thing, he got into Radio Shack, and Walmart, he got 2 professional sports packages, and then got a look at Directv's books :)

Looking at the books gives historical info to both companies. But, now that the opponent knows your playbook, time to invent a new one...

[Jacob S]

Even though Dish got into Wal-Mart and Radio Shack, it is going to take a LOT of subs to make up for that kind of loss. How many would you say it would take and how long would it take being in Wally and Shack? I dont think they could make up for that in just new sub counts, but they could raise everyone's programming bill a buck and make up for it over a period of 5 years not counting interest. I suppose they could make up for it in half the time with the new subs.

That is not a small chunk of change even for a multi billion satellite business. And I wonder how DirecTv is going to use this money? Maybe they will put it into launching more locals or improving their service.

[Eyedox]

A lot of receiver (equipment) makers were waiting to see if the merger would go through before designing a lot of HD boxes ... It will be interesting to see what 2003 brings for new designs. Especially for the DirecTV market. I am personally more excited about the DISH HD-PVRs ....

[jeffcarp]

Directv is going to do nothing with that money until they figure out who is going to own them. One thing this non-merger did was tie up Directv for a long time in "no where" land. Dish has been able to move ahead with their game plan while Direct has had to wait and see.

You can't look at the $600M in terms of $/sub. There are so many ways that a company can deal with taking a charge. You are oversimplfying it. First, and easiest, it could come from cash in the bank (from previous profits). It could come from shareholder's equity in the next calendar year by reducing retained earnings. Lots of things.

What it is NOT, is $600M divided by 8 million customers.

[Chris Freeland]

E* got away cheep, now they do not have to buy PanAmSat at a inflated price, this deal was good for E*. That 600 million will go to GM, it will not effect D* directly. Now E* can take that 2.7 billion dollars that would have gone to purchase PanAmSat to perhaps purchase Cablevision's spotbeam satellite, up-link center and its 11TP's at 61.5. At least Cablevisions satellite assets could benefit more E* subs then PanAmSat would have.

[hectorshelagh2001]

C.F.

My feelings exactly!
Dolan is sitting back knowing he can make out much better by selling his 11 tp at 61.5 to DISH than actually setting up business for himself in the DBS marketplace.

If DISH purchases Dolans/Rainbow's 11 tp's at 61.5 that will bring the total that DISH owns at that spot at 22. Of course they lease 6 more from Dominion/SkyAngel and 2 more are unassigned.

Basically they would control 61.5 and this would benefit subs in the northeast greatly.

There is only so much frequency left to be had ... I gotta believe Charlie will make a deal with Dolan/Cablevision/Rainbow.

[markh]

Great sig, Hector. Do you know if the roast is being moved to an earlier date now?

Both parties agreed to the deal, so they must feel both are better off this way.

I hadn't thought of E* buying the other 61.5 slots but that makes a lot of sense. I've got a good look at 61.5 here. I just checked. Here in southern WI, 61.5 is actually 1degree higher than 119. 33 vs. 32

[Karl Foster]

A couple of months ago, everyone seemed to be all for this merger. I'm paraphrasing, but I remember reading that Dish will never pay the $600 million. Charlie is too shrewd of a businessman. He'll tie up Directv for years. He is the greatest. Blah, blah, blah.

Now that it is over, let's see, Charlie didn't get control over Directv and their customers, he didn't get out of the $600 million, and that will be borne by someone, whether subscribers, shareholders, or whoever. It has to come from somewhere. I'm sure Mr. Ergen will not be paying it out of his own pockets or his own assets. $600 million isn't exactly chump change. Not many conpanies can handle a loss such as this and just take it in stride.

He did get a look at Directv's books, which as a publicly-held company isn't that hard to get anyway, but information exchange is a two-way street.

I, for one, was never 100% for or 100% against the merger (though I never thought it was a good idea) as long as I could continue to use the equipment I already own. I'm just glad it is over and both companies can concentrate on providing good service and products for their customers, and can provide some innovation and good, healthy competition.

I guess the point of my post is that people can't have it both ways - one day portending the doom of DBS if the merger didn't happen and the next saying how shrewd E* is for not getting the merger approved.

I guess I don't know what my point is, just some random ramblings. :)

[Raymond Simonian]

Eyedox, like you, I can't wait for the Dish HD- PVR's. I have purposely not bought the Dish 6000 receiver. I have had a wide screen HDTV for a year but have no been getting any HDTV. I live in central NJ but am too far from either Philadelphia or NYC to get over the air HD reception. Instead I have been watching the wide screen DVD's. I firmly believe that the pending merger had a lot to do with the receivers not coming out any time sooner. I know that the tech forum of last month stated that the 921 will not be out until the second quarter. Perhaps the JVC tu-pvr9000 will be out sooner. If any release date, please post. I have a PVR 50l and the two dishes necessary to get HDTV from Dish Network.

[gowilk]

Originally posted by karl_f
A couple of months ago, everyone seemed to be all for this merger. I'm paraphrasing, but I remember reading that Dish will never pay the $600 million. Charlie is too shrewd of a businessman. He'll tie up Directv for years. He is the greatest. Blah, blah, blah.

Now that it is over, let's see, Charlie didn't get control over Directv and their customers, he didn't get out of the $600 million, and that will be borne by someone, whether subscribers, shareholders, or whoever. It has to come from somewhere. I'm sure Mr. Ergen will not be paying it out of his own pockets or his own assets. $600 million isn't exactly chump change. Not many conpanies can handle a loss such as this and just take it in stride.

He did get a look at Directv's books, which as a publicly-held company isn't that hard to get anyway, but information exchange is a two-way street.

I, for one, was never 100% for or 100% against the merger (though I never thought it was a good idea) as long as I could continue to use the equipment I already own. I'm just glad it is over and both companies can concentrate on providing good service and products for their customers, and can provide some innovation and good, healthy competition.

I guess the point of my post is that people can't have it both ways - one day portending the doom of DBS if the merger didn't happen and the next saying how shrewd E* is for not getting the merger approved.

I guess I don't know what my point is, just some random ramblings. :)


Amen to that post Karl .... i'm guessing that you'll see Charlie and his sidekicks visiting McDonalds just a bit more often till they recover that $600 million ... I bet Murdoch and GM are dancing in the streets thinking about the competitive advantage that was gained by Charlie giving away $600M for nothing ... the important thing is that we now know plan B.

E* Plan B
1. No new channels
2. Get rid of any channels that ask for more money (tnt, nesn)
3. Hold the line on prices until you con enough people into your service and then raise prices like crazy.

My June decision to dump e* sure looks smart now.

[Mike123abc]

Considering E* had about 4billion in cash built up for the merger, 600million is not going to be so bad. The big deal is that they did not have to take PanAmSat (SPOT). SPOT has warned that they may have severe problems next year as many of their big customers might stop paying them. This could have been bad news for E*.

This leaves dish with over 3billion still to maybe put up more satellites or buy something useful like cablevision. With R/L DBS satellite they could do something truly useful like put ABC/CBS/NBC/FOX up in HDTV for 20 or so cities in the east. But, of course they would probably use it to put up LIL for a bunch more cities.

D*'s future is not too pretty at the moment, they are back to square one again. GM will probably want to sell them, now they have to go through the bidding process all over again. Then once that is done, another 6months to a year to get FCC/DOJ approvals. It could range from 9months at best to 2 years for a buyout to complete from today. This would mean no big changes at D* for a while.

Essentially Charlie was more than happy to pay the 600million and run before being stuck having to buy SPOT.

[James_F]

Originally posted by Claude Greiner
...and then got a look at Directv's books :)

But remember that goes both ways. DirecTV knows what Dish looks like so if they do sell to someone else, that knowledge goes with them.

As for Dish tying up DirecTV, that also go both ways. Dish spent all their efforts on this merger, so they lost time as well. No matter how you spin this, its not good for Dish IMO.

[MikeW]

Having Dish exposure at WalMart is certainly nothing exciting. I travel a bit and have seen serveral of WalMart's displays. It's usually a kiosk in the back of the entertainment section and no knoweledgeable staff to guide a customer.

[jeffcarp]

Originally posted by karl_f
...Now that it is over, let's see, Charlie didn't get control over Directv and their customers, he didn't get out of the $600 million, and that will be borne by someone, whether subscribers, shareholders, or whoever. It has to come from somewhere. I'm sure Mr. Ergen will not be paying it out of his own pockets or his own assets. $600 million isn't exactly chump change. Not many conpanies can handle a loss such as this and just take it in stride.

Dish has nearly $2.7 BILLION is cash AFTER paying Directv. Yes, they CAN take it in stride. They just did.

[platinum]

dish also has a pretty big debt load

[Richard King]

I want to know how Echostar got out of buying Panamsat. Thats a BIG story in itself.
Dish now has a LARGE cash reserve because of all this, I wonder what they can do to push ahead?
There was a material change in the condition of PanAmSat that was probably used as the reason for the dropping of the purchase.

Since the merger is now over and the fat lady has sung, Vivendi is now free to convert their stock into regular old unrestricted common stock and sell it at will. I would like to see Dish buy this stock back at the greatly reduced (although not as reduced after today) market price that it is selling at now compared to when Vivendi bought it. The difference would go a long way to making up the $600 Mill.

[RWebb71980]

What if?

Take a look at this, I found it interesting.

http://www.dishretailer.com/ts2002/Disk2/MVC-003S.JPG

[Nick]

Karl_f opined...

"...the $600 million...will be borne by someone, whether subscribers, shareholders, or whoever. It has to come from somewhere..."

Right you are, Karl. All costs are ultimately borne by the consumer. We are all consumers. It's just a matter of which consumers take the hit.

"Freedom is just another word for nothing elsde to lose." Janis Joplin

[Scott Greczkowski]

If hes writing it off dosent that mean hes writing it off as a loss on Echostars taxes? Does that mean Tax Payers (Not just Echostar Customers) are paying in part for the failed merger?

(Im not an accountant so excuse the dumb question) :D

[Nick]

Take a look at this, I found it interesting."

http://www.dishretailer.com/ts2002/Disk2/MVC-003S.JPG


Mmm, uh, I'll have the large pizza and the small one for $2, and 3 sides. Oh, this isn't the Pizza Palace? :D :D :D

[MarkA]

While I don't understand the tax law very well I do know that, yeah, it goes something like what you said. More or less, I ain't sure either. Ain't IRS great? Take from the poor and give to the rich...

[gawise]

I guess losing $600 million dollars to embark on an ill-conceived business venture will now be referred to as Ergen-omics!!

Good riddance, Charlie!!

Greg in Baltimore

[jeffcarp]

No way guys. The taxpayers have nothing to do with a private company. A write-off reduces retained earnings. The shareholders take a hit but customers and the public do not. Also, Echostar has nearly $3 billion in CASH. So this $600M payment is not the end of the world by any means.

Think of it this way: If you have $10,000 in the bank and you suddenly had to pay someone $2000, does that mean you are in financial trouble? No.

[Frapp]

Originally posted by Claude Greiner
<snip>Look at it this way, the $700 Million dollers for the merger, can now be written off on this years books, instead of next year.

Eitherway, Charlie still came out the winner in this whole thing, he got into Radio Shack, and Walmart, he got 2 professional sports packages, and then got a look at Directv's books :)

You sound like some of my employees: Let`s do this and that for the stores, it`s a tax write-off anyway. Let me tell you, a tax write-off is also CASH out of the pocket in most cases, especially this one.

Bottom line here is: Ergen took a hit, a big hit and it will take a while for Echostar to recover from it. Why do you think he has already told subscribers higher programming fee`s are coming and has tried to instill all retailers to sign a very interesting contract for the next year that takes away more of your rights as a retailer ?

As far as Radio Shack, they may help Echostar with distribution ( that is if DirecTV does not convince them to once again close the door on Echostar ) Wall Mart will probably be a joke for Echostar, kind of like Target was for a short time. The two pro-sports packages are helpful, but not worth the price ( I wonder if Echostar could have used that $700M to bid on NFL ST ? )

Lastly, I could give you all of my corporate books for the last five years and it would not benefit you in the least other than to see how well or bad we were doing. :shrug:

[Geronimo]

Well first of all E* is not a private company. It is publicly traded. Second the way retained earnings are affected is by a company having a profit or loss to report that is not distributed.

In this case E* has an expense. They can charge it one period or they can charge it over several but in either event it either increases the loss or reduces profit in the appropriate period(s) . If it reduces profit than the tax liability is lessened. In that sense the treasury is affected whennever any comapny has an expense.

[Nick]

Originally posted by gawise
I guess losing $600 million dollars to embark on an ill-conceived business venture will now be referred to as Ergen-omics!!

Good riddance, Charlie!!

Greg in Baltimore
Ill-conceived? Cheap shot.

It was a brilliant plan, and only because it was such a bold and aggressive move did so many competing interests lobby the FCC and DOJ against the merger. It may have been your best chance to get locals into Baltimore in your life time.

[Greg Bimson]

Nick,

gawise, like myself, is in Baltimore. And all Mr. Wise needs to do for Baltimore locals is have DirecTV. He doesn't have to wait a lifetime; he just needs to go pickup a DirecTV receiver.

It was a "brilliant plan"? I'm sure every company in the country would like to have a monopoly in their respective industry. It is specifically why so many people lined up against this merger.

The only thing "writing off $600 million" means is that accounting rules will allow Dish Network to write the check to General Motors, and "write off" the whole expense as a one-time charge, instead of dividing this charge over the next year or two.

Therefore, Echostar's fourth quarter results will be something like a net loss of $550 million, with a one-time charge on the books of $700 million for the merger fee.

[Jacob S]

Maybe it will not be such a loss after all, considering the stock went up 10% in one day. That would probably make up for the entire loss if not more.

[gawise]

Originally posted by Nick
&nbsp;
It may have been your best chance to get locals into Baltimore in your life time.

????

I've had FANTASTIC-looking Baltimore locals on DirecTV for YEARS!!!&nbsp;

I haven't had an active E* receiver for over a year.

And, I don't have to worry that a maniacal CEO is going to get into an argument with programmers causing ME to lose channels I like....

I don't always want the cheapest service...I want the BEST service...and that's DirecTV.&nbsp; A merger would have compromised that quality.

&nbsp;

Again...good riddance Charlie!!

&nbsp;

Greg in Baltimore (with FABULOUS DirecTV locals!!)

[jrbdmb]

Originally posted by gawise

I've had FANTASTIC-looking Baltimore locals on DirecTV for YEARS!!!&nbsp;

And, I don't have to worry that a maniacal CEO is going to get into an argument with programmers causing ME to lose channels I like....

Greg in Baltimore (with FABULOUS DirecTV locals!!)
Ever heard of Rupert Murdoch? ;)

[JBKing]

Internal email now circulating among E* employees:


All overnight travel stays will now follow the rule of 4 per hotel room
The Jelly of the Month Club Christmas Bonus has been cancelled
Bye Bye TNT!
Look for more shopping channels next month
"Complimentary" Coffee will now be available for a nominal .25
On your once a day, 5 minute break, please see restroom attendent for your TP allotment, should you require more, there is a nominal fee of .05 per sheet.
Breaks going over the 5 minute maximum will be deducted from your paycheck
Charlie Chat dial in number has been changed to 1-900-CHARLIE (1-900-242-7543) - only $3.99 per minute!

[Bob Haller]

Well worth the money looking at your competitor from tthe inside

[Curtis0620]

Yah, and Directv got to look at Dishnetworks books and got paid $600M to do it.

[Karl Foster]

Why is everyone making such a big deal of looking at each other's books? Both of these companies are public-traded comapnies who are required to publish annual reports every year with all of their financial data. Even an Internet-illiterate like me can find their financial data.

As far as what equipment will be developed, etc., I believe both companies have a good insight into each other's comings and goings. It isn't hard to do, even without the books being open.

[Jacob S]

Dish looked at Direct's books and Direct looked at Dish's books. Even Steven.

[Nick]

whoops! My bad. I thought this was the DISH diiscussion forum. :rolleyes:

[Jacob S]

That is what we are discussing isn't it? lol

[BrettR]

Originally posted by Greg Bimson
Nick,

gawise, like myself, is in Baltimore. And all Mr. Wise needs to do for Baltimore locals is have DirecTV. He doesn't have to wait a lifetime; he just needs to go pickup a DirecTV receiver.


Just out of perspective, lot of people in Howard, Anne Arundel and Carroll County watch the D.C. stations on cable. Dish cannot offer a locals pack with D.C stations in those counties. If they offered only Baltimore channels, there's the chance that vast number of potential subscribers wont take the package because its not including D.C. stations which they are accustomed to seeing. I believe Cecil is a region that gets Both Philly and Baltimore. The Philly FOX and Baltimore FOX air different NFL games often, and the Cecil County cable subscriber may be used to getting both FOX stations.

On a NJ Forum, I asked about WTXF 29 which is carried in Monmouth, Ocean, Middlesex and part of Hunterdon which is far into Central NJ away from Philly. WTXF 29 doesnt offer much local to these communites. Since its FOX O&O like WNYW, WNYW 5 (FOX) hasnt complained. I think its a deal the two sister stations WNYW and WTXF have now. They agree that regions like Allentown, Trenton and Central NJ are OK'ed to get both FOXs. In Trenton, both can get carried by retrans or must-carry.

But in Allentown and Trenton the cable systems were requested to move WTXF 29 to Ch.5 (previously WNYW was on CH.5). WNYW was moved to a higher number. WTXF 29 is very hard to pick up in Eastern Monmouth but its still on cable. I think its still Grade B and sufficient, that WPIX or a NYC station cannot request blackout.

If WTXF 29 wasnt O&O, supposing it was Sinclair owned I'm sure WNYW would not want WTXF 29 anywhere in Central NJ. Even if its signal reached some communities. This seems to be true with WBFF 45 (Fox) not seen anywhere outside of its Baltimore market even though it can be picked up over the air outside of the market. Cable systems in D.C. had to drop it as per WTTG 5's request.

IMO when I'm in that region, I prefer WBFF 45 only because WTTG 5 has a huge logo (bug) on most shows. But really many want both because of timeshifting of syndication, more newscasting, and more NFL games if the two are running different games.

In Central NJ, KYW 3 used to be carried on cable. WNBC 4 requested the cable systems to drop it. However when Ch.10 became the new O&O NBC in the Philly market, WNBC 4 didnt ask the Central NJ cable systems to drop WCAU 10.

Could it be Dish doesnt want to choose to carry Baltimore or Hartford (in New Haven - NYC channels are carried on cable), because the residents are used to getting both markets and want both markets?

I originally thought Philly was a dumb market to do LIL.

But according to WWAC-TV (an Atlantic City independent station), they claim 300,000 HH (http://www.wwac.tv/cablecoverage.html) on DBS. Granted E* has them on 129, but according to the station manager who I emailed if this was accurate, 300,000 people take the Philadelphia local package from DBS and have access to WWAC (although with Dish, they have to call and request the big dish for the station). The station manager Bob Lund said this information was from Nielsen Media and the satellite companies themselves.

300,000 HH isnt bad considering Comcast's attempts to hinder DBS growth.

No doubt I would like Baltimore offered, but think people should get both markets.

Of course the broadcasters would complain of diminished exclusivity zones and less retransmission they can get from the satellite companies. But I think its to the public benefit. In a region of Southern Ocean County, its considered NYC DMA but the Philly TV stations cover this area in News not NYC. Its also CCSN sports area, Philadelphia Coke & Pepsi bottling region, 609 area code, and by many business considered part of Philly market. The only reason its NYC DMA is because the county is vast, and the far North East part of the County outweighs the rest of the county in viewership habits.

But in the case of Baltimore and New Haven DMA its a large percentage of people that are used to getting another markets locals.

[Win Joy Jr]

Brett -

as a DC local for most of my life, it was a 2 way street with DC / Baltimore. Comcast used to offer both Baltimore as well as DC on the PG County system. FOX 5 in DC balked a few years ago, and thus FOX45 got removed from carriage.

All it take in this area is on which side of the county line your address falls as to if you get Washington or Baltimore.

[BrettR]

The FOX 5, FOX 45 issue is unique. FOX made D.C. area cable systems drop WBFF 45(Sinclair-owned) but Baltimore area cable systems in Howard Anne Arundel Carroll Harford couldnt drop WTTG. I believe FOX 5 also asked the VA cable systems within D.C. DMA drop the Richmond FOX.

I know Baltimore County and Baltimore City only get Baltimore stations on cable. In this area, I suppose people have become used to Baltimore stations without needing D.C. stations.

In Howard County, WTTG is carried on Ch.5, and WBFF on Ch.30!! I'm sure WBFF must be happy that within their own DMA WTTG will pull more viewers on cable. How does WBFF even get retransmission from cable if cable is carrying WTTG? They have less bargaining power.

Seems unfair to Sinclair and WBFF. Sinclair Broadcasting is actually based in Baltimore region itself. They own WBFF and now WNUV, duopoly. Prior it was an LMA arrangement but FCC has loosened duopoly restrictions, now both are Sinclair owned.

I do know Sinclair has refused to pay FOX for news content,
Link 1 (http://www.baltimoresun.com/entertainment/tv/bal-to.tvradio24jan23,0,6156055.column?coll=bal-tv-utility)


but Sinclair and FOX have renewed their affiliation
Link 2 (http://baltimore.bizjournals.com/baltimore/stories/2002/10/28/daily27.html)