EchoStar Looks to Expand Business

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EchoStar Communications said Thursday that it’s interested in expanding its business, and that “broadcast assets” are attractive, but it declined to comment on reports that it made a failed $2.13 billion bid for ION Media Networks.

During a first-quarter conference call, EchoStar president Carl Vogel was asked about a report in the New York Post last week that said EchoStar had made an offer for ION, which owns 60 TV stations, runs a broadcast network and reaches 83% of U.S. TV households.

“We continue to look for things that we think are complementary,” Vogel said. “I can’t comment specifically on any rumors, but we do think there are complementary assets to what we do, where we can leverage our ability to build set-top boxes and to provide content and to bill and collect and to service customers. Certainly, broadcast assets [that] we think are similar to what we do today, we find that category attractive.”

Vogel also addressed the question of whether EchoStar, since it is underleveraged, would consider a stock buyback.

“That is on the list, but it is not at the top of the list,” Vogel said. “We see things where we can, again -- leverage our expertise, our infrastructure, our hidden assets we see in our EchoStar Technologies group -- is probably more in the forefront. We continue to look at things. We continue to actively participate in things, but we don’t have anything specific that we can speak to at this point. But when we do, we will certainly outline why we did something and how we see that fitting with us in the long term. But we still remain extremely active and interested in expanding our business.”

Last Friday, ION accepted a tender offer from NBC Universal and Citadel Investment Group, which will invest $100 million in the broadcaster’s growth and digital plans. The deal, in which ION will go private, had been opposed by a group of disgruntled shareholders who claimed that there were better offers made, including the one from EchoStar.

On Thursday, EchoStar reported that its Dish Network added about 310,000 net new subscribers during the first quarter, ending with 13.415 million subscribers.

When asked what drove that growth, EchoStar chairman Charlie Ergen said it was due to a combination of circumstances, such as strong HDTV growth up until the Super Bowl and a bump up resulting from Dish’s partnerships with telcos to offer video, voice and high-speed data.

“There’s no one factor,” he added.

During the call, former Charter Communications executive Vogel made reference to some of the bullish remarks made by cable executives at The Cable Show '07, in part regarding the triple play, this week in Las Vegas. Vogel went on to cite DirecTV’s first-quarter results Wednesday: a net gain of 235,000 subscribers for that satellite provider, taking it to 16.19 million.

“The cable guys, having been one in the past, were all very on-message and well-trained at the NCTA,” he said. “And everybody pretty much said the same thing. But the fact is, at least for this quarter, that between EchoStar and DirecTV  we have 75% of the net [subscriber] adds. That’s not a broken business.”

Asked about EchoStar’s plans to create its own broadband offering, Vogel said, “We recognize that broadband is more important going forward, and Charlie has mentioned on this and all prior calls that we continue to look at our own broadband opportunities and investments. And we continue to work with our telco partners to sell their product.”

But Vogel reiterated EchoStar’s strategy and focus of being “the best video provider that we can be ... because not everybody is looking for a triple-play.”

EchoStar reported total revenue of $2.64 billion for the first quarter, a 15 % increase compared with $2.3 billion for the same period in 2006. Net income totaled $157 million for the first quarter compared with $147 million during the same period in 2006. Basic earnings per share were 35 cents for the quarter compared with 33 cents during the year-ago period.

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