With investors anxious about the viability of the satellite TV biz, EchoStar on Wednesday suggested a deal with its satcaster rival to create a broadband service could be in the offing.
“If something developed where we could do something with DirecTV, we’re certainly keen on that idea,” chairman-CEO Charles Ergen told analysts in a conference call. “We continue to look at that.”
Ergen said it would be a lot easier to build out a broadband service for a potential customer base of 30 million — which it could achieve in a joint venture with DirecTV — than if it tried to go it alone.
Rumors of a service that would instantly bring both satcasters into the bundled-services game have percolated for more than a month.
Companies have made very few comments, and investors reacted to Ergen’s remarks Wednesday as an encouraging sign.
Wall Street tends to embrace the prospect of satcasters offering broadband — EchoStar’s stock has climbed steadily since the rumors began — as it has other crossover moves between telcos, cable and Internet firms.
Ergen acknowledged that “the bundle that the cable and phone companies have is a factor in stealing good customers away from us.”
But actually building out a wireless broadband system could be onerous for satcasters.
EchoStar, too, agreed that it needed to be cautious about diversification. “The biggest part of our business still continues to be the basic video subscriber that the cable industry is trying to go after and now the phone industry is going after,” Ergen said. “We’re not going to place a big bet that doesn’t make sense to satisfy someone on Wall Street.”
News comes as the company announced that net income nearly doubled to $133 million in the fourth quarter compared with the same frame in 2004, and revenue climbed more than 12% to $2.18 billion, partly because of more expensive services for existing customers.
Churn continued to be low — about 1.65% — but the company acknowledged it needed to do better at reaching new customers.
An actual merger with DirecTV seemed to be nixed outright by Ergen.
“We’re the only telecommunications merger that got turned down in the last 10 years,” he said, alluding to the company’s failed bid to acquire DirecTV.
Shares of EchoStar stock closed Wednesday at $29.78, up 43¢.