EchoStar Bundles Satellite TV and Internet Services
By Cindy Christ

Satellite TV operator EchoStar Communications (DISH) unveiled a $50 million alliance Monday with privately held iSKY Inc. to combine high-speed, satellite-based Internet service with hundreds of TV channels from EchoStar's DISH Network.

Under the agreement, EchoStar will own a 12 percent stake in iSKY and receive warrants tied to performance targets that could boost its interest up to 20.8 percent.

EchoStar also will receive a "substantial revenue-sharing payment" from iSKY, and each company retains mutual, long-term rights to sell each other's services.

The two will deliver always-on Internet and TV services to homes and small businesses starting in late 2001 using a small dish and single set-top box. The companies said the 26-inch dish can both send and receive Internet data at speeds up to 30 times faster than standard dial-up modems.

EchoStar will provide sales and installation for consumers through its nationwide DISH Network of 23,000 retailers.

"This will be the first easy and affordable way for consumers to access Ka-band satellite broadband and satellite TV through one sale process, one installation and one set of equipment," said iSKY CEO Thomas Moore in a news release.

"We forecast that 25 to 30 million U.S. homes will not have access to any other broadband solution when our service hits the market next year. Of those, we expect a significant number will choose iSKY," he added.

iSKY said it expects to provide service in Latin America with the launch of a second satellite in mid-2002.

Other major iSKY investors include TV Guide (TVIGA), Kleiner Perkins Caufield & Byers, TRW (TRW), TeleSat and AT&T (T), and Liberty Media Group (LMGa).

Shares in DISH, which split 2-for-1 March 23, rose $0.81, or 1.1 percent, to $76.94. Intraday, shares traded as high as $81.25.

On March 21, Credit Suisse First Boston raised its 12-month price target on the direct broadcast satellite service provider to $162 a share from $125.

Littleton, Colo.-based EchoStar reported 1999 results in mid- March, posting $1.6 billion in revenues versus $983 million in 1998.

Pre-marketing cash flow totaled $554 million for the year, up from $300 million the previous year. During fourth quarter 1999, the DISH Network reported a record number of new viewers, adding about 438,000 net subscribers for a total of 3.4 million customers at yearend.

EchoStar's operating loss for 1999 totaled $347 million compared to $123 million in 1998.