Echostar ‘doubt about ability to continue as going concern’

DISH Network owner Echostar has admitted that the company may not be able to survive as a going concern as debt matures this year. Last week the company reported a massive Q4 loss, a big drop in revenue and subscriber numbers.

EchoStar_LogoIn an SEC filing, the US pay TV operator’s management said that “the Company has debt maturing in 2024 and expects to use a substantial amount of cash in the next twelve months. This raises substantial doubt about its ability to continue as a going concern.”

The management added that its “consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.”

The admission came after EchoStar reported 2023 total revenue of $17.02 billion, compared to $18.63 billion in 2022. It said net decrease in revenue primarily resulted from pay TV subscriber declines both from DISH TV and Sling.

The company turned in a net loss of US$1.7 billion for the year, down from net income of US$2.48 billion in 2022.

The loss was mostly down to a noncash impairment to goodwill totaling approximately $758 million, and an adjustment to the carrying value of the company’s 800MHz wireless spectrum purchase option totaling approximately US$1.8 billion.

Revenue for Q4 was US$ $4.16 billion, down from US$4.53 billion, with a Q4 net loss of US$2.03 billion compared with a profit of US$984 million.

Net pay TV subscribers decreased by 314,000 in the fourth quarter, compared to a decrease of approximately 268,000 in the year-ago quarter.

The company closed the year with 8.53 million subscribers including 6.47 million DISH TV subscribers and 2.06 million Sling TV customers. The increase in net sub losses was driven by DISH TV, offset by a decrease in net Sling TV losses.

The company also lost wireless subs, down 123,000 in the fourth quarter, compared to a net decrease of 25,000 in the year-ago quarter. The company closed the quarter with 7.38 million Retail Wireless subscribers.

The bad news continued with broadband net subscribers, down by approximately 59,000 in the fourth quarter, compared to a decrease of 57,000 in the year-ago quarter.

‘One way to get there’

To attempt to alleviate its financial woes, the company is looking into raising debt against its spectrum assets, and may also look to divest further.

Addressing this issue on the company’s earnings call, recently appointed CEO Hamid Akhavan said his initial debt-related priority was “meeting our immediate obligations in March” with the next deadline looming in “November to address the next maturity here”

Akhavan  said that raising debt on its “unencumbered spectrum assets” was “a market that generally understood by the investors”.

“We have spectrum assets, it’s one way to get there,” he said, adding that “we do have other assets such as the subscribers we mentioned from our pay TV business”.

Akhavan said that Echostar would not be rushed to take a decision.

“Look, we’re going to take our time and make a transaction that is in the best interest of all parties, the company and all the stakeholders involved. And we have a significant amount of time to do that. I do not find myself and the company under the gun to make a transaction in a rapid fire. As I said, the window is long enough for us to make a sound decision that is a long-term oriented solution for the company, and we’re not going to compromise by making a quick decision there,” he said.

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