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Ah, the birds of love.
Billionaire Charlie Ergen is reuniting his companies Dish and EchoStar, which he spun out from one another 15 years ago. This comes a day after US private-equity group KKR agreed to a deal with German satellite manufacturer OHB to take the company private.
Ground Control to Charlie
The commercial satellite industry is heating up, spurred on by tech companies like SpaceX and Amazon launching their own constellations of satellites with the idea that they'll beam internet down to hard-to-reach parts of the globe, capturing a niche but hungry market.
EchoStar was spun out from Dish in 2008, and while Dish has focused on broadcasting, EchoStar has been more about communication. Now, Ergen says bringing them back together just makes good business sense:
- "This is a strategically and financially compelling combination that is all about growth and building a long-term sustainable business," Ergen said.
- Consolidation might be what various pockets of the space industry need to survive, as funding hit an 8-year low in Q1 of this year.
For OHB, that dip in investor enthusiasm made the KKR deal look a whole lot more appealing. "It's a value creation challenge that we have in front of us now," OHB CEO Marco Fuchs told the Financial Times, adding he thinks going private will get a better valuation for the company given the industry has a "very lumpy nature."
Private Space: Fuchs also said the move corresponds with a broader push toward privatization within the industry. "The whole business model is changing," he told the FT. "Government agencies used to decide what rockets would be developed and then they would use them. Now the rockets are being developed with private money and government decides which one to use."
