The FCC & Elon Musk Trigger Cable Apocalypse for EchoStar Shares—Bankruptcy Is Looming…

Charlie Ergen’s telecom death spiral has finally hit the “skip interest payments and pray to the bankruptcy gods” phase. Meaning, you’ve ever wondered what self-immolation looks like in corporate America, EchoStar is putting on a clinic. 

(Source: Giphy) 

In short, EchoStar, the satellite relic that somehow still owns Dish Network, is currently dangling over the abyss with a $500 million hangman’s noose of skipped debt-interest payments. Meanwhile, the FCC’s got the bolt cutters out, sniffing around its spectrum licenses and threatening to snatch the last valuable thing EchoStar owns… all because the company built out its wireless network about as fast as my grandma upgrades her iPhone. Which is to say, not at all. 

The FCC, led by Brendan Carr, basically asked Charlie, “where’s all the 5G?” Spoiler: not where it’s supposed to be. In May, Carr said EchoStar’s spectrum is up for review, and if the Commission yanks those licenses, the only thing left for EchoStar shareholders will be a participation trophy and a monthly bill for Fubo. The company’s official line is a word salad about “ubiquitous connectivity” and “competitive alternatives”. Translation: They are cooked. 

(Source: Wall Street Journal) 

Meaning, behind the fog, EchoStar’s management has been paralyzed, saying the FCC’s threats have “effectively frozen our ability to make decisions” about investing in Boost Mobile. Which is understandable. Why continue backing up the brinks truck into a business that might get vaporized by regulators any minute now? To be fair, EchoStar did try to wriggle out of the death grip. 

For instance, they attempted to duct-tape Dish and DirecTV together, hoping for some miraculous synergy like two drunk degenerates starting a food truck. However, bondholders, sitting on $10 billion in Dish and DBS debt, laughed them out of the room when asked to take a haircut. So the deal was roasted. Meanwhile, EchoStar’s stock chart looks like the ski slope from hell: down 8% on Friday, 23% year-to-date, and 42% over five years. 

(Source: The Street) 

Now with that said, the only asset EchoStar has that anyone with a pulse still cares about? Wireless and satellite spectrum. But those licenses come with “build it or lose it” clauses, and the FCC… with some not so subtle nudging from Elon Musk’s SpaceX (read: Starlink)... is lining up to pull the rug out. For example, Elon’s Starlink has wiped the floor with satellite internet incumbents, making cable and Dish feel as useful as a rotary phone in an Apple Store. SpaceX even went snitch mode in April, waving data around to show EchoStar missed its 70% buildout deadline. Talk about savage. 

Of course, EchoStar is still posturing that it’s hit its regulatory marks and insists the FCC is out of line, but let’s be real: if you’re prepping a Chapter 11 filing in public, the house is already on fire and the only thing left is to decide which couch to throw out the window. Especially when you have Elon Musk against you. 

(Source: Giphy) 

So yeah, that’s where we are. The main catalyst all hinges on the FCC. If they pull the plug, EchoStar’s bankruptcy won’t even buy enough time to organize a yard sale… and the vultures (read: AT&T, Verizon, and SpaceX) will have found some dinner. For now, keep your eyes on this story as this will likely shake up the telecom sector and place your bets accordingly. Until next time, friends… 

At the time of publishing, Stocks.News holds positions in AT&T and Verizon