Charlie Ergen’s payoff: a space-bound meme hoard
09/09/2025 13:00
The author is a Reuters Breakingviews columnist. The opinions expressed are his own. By Robert Cyran NEW YORK, Sept 8 (Reuters Breakingviews) - Alchemists once sought to transmute lead into gold. They failed, but made plenty of fruitful discoveries along the way. That’s perhaps Charlie Ergen’s hope after an over-decade-long attempt to turn EchoStar’s SATS.O hoard of wireless spectrum into boundless lucre, one that nearly tipped into bankruptcy. The mogul is now dismantling that effort, announcing a $17 billion deal with SpaceX on Monday that swaps airwaves for cash and a stake in Elon Musk’s rocket- and satellite-maker. It essentially pushes his gambit of hoarding scarce assets into the stratosphere. The transaction, combined with an earlier sale of wireless bandwidth to AT&T T.N, leaves EchoStar with a curious grab-bag of assets. The company’s operations, namely a declining satellite TV operation and an also-ran cellphone service provider, are expected to lose over $700 million this year, according to analyst estimates gathered by LSEG. What will the remainder look like? Once it liquidates its spectrum, the company might have $24 billion of proceeds after paying down debt, lease costs and taxes, estimates New Street Research, and some additional cash on its balance sheet. The company’s market capitalization was $19 billion based on Friday’s close. However, EchoStar will also own up to $8.5 billion worth of equity in SpaceX, which is eyeing a valuation of $400 billion, Bloomberg reported. That’s assuming the spectrum sale closes, which might take a long time: the companies expect to wrap it up in 2027, with an option to extend their agreement into late 2028. What this stake is worth then is anyone’s guess. Fundamental value might not be the overriding concern. Public investors have no easy way to directly own shares in Musk’s space venture. They have opted to pay well over the odds to get whatever exposure they can. Consider Destiny Tech 100, a listed closed-end vehicle that owns stakes in private firms. Over half the fund’s holdings are tied to SpaceX. Its total assets were worth $77 million on June 30, yet the fund’s market value was over three times as high. If EchoStar’s stake achieved a similar premium, it alone would be worth over $30 billion, potentially propelling the entire company’s worth above the high-water mark of $41 billion set in 2015, when including since-acquired sibling firm Dish Network. After years of wheeling and dealing, Ergen will have finally created value. Yet the rarity premium has fallen: Destiny Tech traded at a 13-to-1 ratio last year. Meme-y buzz for private companies can only go so far. If it erodes further, EchoStar might still face a leaden outcome. Follow Robert Cyran on Bluesky. CONTEXT NEWS EchoStar said on September 8 that it had entered into an agreement to sell licenses for use of AWS-4 and H-block spectrum to SpaceX for approximately $17 billion. The satellite television operator will receive as much as $8.5 billion in cash and up to $8.5 billion of SpaceX stock. Additionally, SpaceX will fund $2 billion of cash interest payments on EchoStar debt through November 2027. On August 26, EchoStar said it had reached an agreement to sell wireless spectrum in the 600 MHz and 3.45 GHz bands to AT&T for $23 billion. SpaceX was discussing plans to raise money and sell insider shares in a round that would value the company at about $400 billion, Bloomberg reported in July. EchoStar looks to surpass the Ergen empire's high-water mark https://www.reuters.com/graphics/BRV-BRV/BRV-BRV/myvmxyqdlpr/chart.png (Editing by Jonathan Guilford; Production by Maya Nandhini) ((For previous columns by the author, Reuters customers can click on CYRAN/robert.cyran@thomsonreuters.com; Reuters Messaging: robert.cyran.thomsonreuters.com@reuters.net))