EchoStar plans for Hughes
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December 26, 2001: 7:12 a.m. ET
Satellite-TV provider sets plans for combined company, months before approval.
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NEW YORK (CNN/Money) - As its $25.8 billion purchase of Hughes Electronics Corp. awaits regulatory approval from the Justice Department and the Federal Trade Commission, EchoStar Communications Corp.'s chief executive is already developing plans for the combined company, according to a published report Wednesday.
EchoStar's chairman and chief executive, Charlie Ergen, said the company plans to invest at least $1 billion in Hughes' Spaceway high-speed Internet project and increase its 81 percent ownership in fixed-satellite services provider PanAmSat (SPOT: Research, Estimates), the Wall Street Journal reported.
Ergen said "investors may not like me too much," because "I'm passionate about developing that technology." But Ergen told the Journal the Spaceway project remains "extremely risky."
Ergen did say a combined EchoStar-Hughes, which would have a subscriber base of about 16 million, would provide the "the financial structure and subscriber base" needed to avoid "betting the entire company on the outcome," the paper reported.
In addition to the Spaceway and PamAmSat projects, Ergen said some of Hughes' DirectTV businesses in Latin America are core operations that would not be sold or considered for joint ventures if the merger is approved, according to the paper.
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In arguing for approval from the government, EchoStar contends the combined company will offer a stronger rival to cable-television operators, such as the proposed AT&T-Comcast firm.
Littleton, Colo.-based EchoStar also said its acquisition of Hughes will allow it to boost its satellite fleet, which will provide for better backup in the case of a technical problem, according to the Journal.
Shares of Hughes Electronics (GMH: Research, Estimates), currently a unit of General Motors (GM: Research, Estimates), fell 7 cents to $15.02 Monday, while EchoStar (DISH: Research, Estimates) shares gained 7 cents to close at $26.76.
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