NEW YORK (AP) — After Dish Network said it will transfer five satellites to EchoStar, an analyst said the company is paving the way for a combination with competitor DirecTV.
Dish Network Corp. declined to comment on any proposed deal with DirecTV.
The satellite television provider said Friday that it will transfer five satellites and $11 million in cash to EchoStar. In return, Dish Network will get an 80-percent economic interest in the residential retail satellite broadband business of Hughes Network Systems, a unit of EchoStar. It will also lease back some broadcast capacity on the satellites. The deal will take effect March 1, and Dish said it will reduce its long-term interest payments and incentive payments.
Citi Investment Research analyst Jason Bazinet said Dish Network has now set itself up for a merger with DirecTV rather than a sale to a telecommunications company. He rates Dish Network shares "Neutral" with a price target of $61.
Wunderlich Securities analyst Matthew Harrigan differed, however, saying "we remain skeptical on a merger with DirecTV." He said if Dish and DirecTV wanted to combine, the federal government might require them to expand their wireless internet capacity, and Dish appears reluctant to compete with larger mobile carriers. Harrigan rates the shares "Hold" and raised his price target to $51 from $49.
Dish Network Corp. shares rose $2.17, or 3.8 percent, to $59.24 in morning trading.
Original headline: Analyst: Dish Network clears way for DirecTV deal
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