• by Wayne Friedman , May 20, 2019

Dish Network’s stock price sank 10% on the news of a $800 million deal to buy a business unit from EchoStar, its former parent company.

On Monday, the satellite TV programmer said it struck a deal to buy EchoStar Corp.'s broadcast satellite service (BSS). Dish will exchange 22.9 million of its shares to be distributed to EchoStar shareholders, in exchange for nine direct broadcast satellites, key employees and real estate properties.

In January 2008, Dish Network was spun off from EchoStar. Since then, Echostar remains the primary technology partner for Dish Network.

Much of Dish’s network positive growth comes from a potential future sale of its wireless spectrum assets, estimated to have a value of $21 billion; the fifth-largest holder of wireless spectrum in the U.S. according to the estimates.

Jeff Wlodarczak, media analyst at Pivotal Research Group, downgraded Dish to a “hold," noting: “The likely ultimate approval of the... deal likely significantly pushes back the timing for a potential Dish spectrum deal materially.”

Wlodarczak adds: “While [Verizon] still absolutely would appear to need Dish spectrum, it appears to be under little pressure to actually enter into a deal in the short/medium term.”

Factoring in all of this, Pivotal has reduced Dish’s spectrum value by 10%.

Mid-day Monday trading of Dish’s stock was down 11% to $31.48.