A message from Octus: Access Octus inside Claude, ChatGPT or other LLMs you use

Every credit desk is plugging AI into its workflow. Most are still stuck feeding it PDFs and static exports. Octus just launched the Octus MCP Connector™, giving subscribers a direct route from verified Octus intelligence, data and deal room documents directly into Claude, ChatGPT or other LLMs, so they can query that content in plain language from inside the AI tools they already use.

What's actually running under the hood:

Welcome back!

We’re excited to go through another deep dive by the HYH Newsletter team.

Quick announcement though - we launched a Community - High Yield Harry’s Community. This is a great place for wall street professionals connect - you can set up an anonymous account, or treat it like LinkedIn, whatever you’d like. Think of it as our own social network. Join here.

Anyways, in today’s piece, we’re looking at EchoStar Corporation (NASDAQ: SATS) (the “Company”), a satellite television and telecom company controlled by Charlie Ergen that houses DISH Network’s legacy pay-TV business, the Boost Mobile wireless brand, and Hughes satellite broadband. We’ll cover how Ergen’s multibillion-dollar bet to build a national 5G network and challenge the wireless Big Three (AT&T, T-Mobile, Verizon) led to one of the most interesting sagas in restructuring.

We’ll walk through an overview of the company, its liquidity challenges, and the mechanics of the dropdown. Next, we will cover the ensuing co-ops, litigation, recapitalization, and failed DISH-DirecTV merger that brought the company to the brink of bankruptcy. Lastly, we will break down the regulatory intervention that forced the company’s pivot away from its 5G dreams, and analyze the consequences of the recent March 2026 RSA. 

There’s a lot packed into this piece that makes it timely: SpaceX, a billionaire tycoon, the lead-up to the DBS Wireless filing, and LMEs; so let’s get started.

EchoStar has three primary lines of business: 1) Pay-TV, 2) Wireless, and 3) Broadband and Satellite. Here’s the breakdown on each: 

Pay-TV: EchoStar’s largest revenue segment. DISH TV delivers live television via satellite dish to subscribers, while Sling TV offers leaner live channel bundles over-the-top (OTT) via the internet, bypassing cable and satellite infrastructure. Both are subscription businesses where revenue is generally a function of subscriber count times ARPU, with the primary cost being programming fees paid to content owners.

Wireless: The Company acquired Boost Mobile (“Boost”) as an FCC-mandated condition of the T-Mobile / Sprint merger in 2020. The plan was to utilize EchoStar’s Open RAN 5G network to create a fourth national carrier to compete with the Big Three. Historically, the Big Three had based their networks on proprietary RAN (radio access network) infrastructure, relying on single vendors to provide both hardware and software. Open RAN, which EchoStar was pioneering, allowed the Company to mix and match vendors bringing down costs and vendor concentration.

Broadband and Satellite: Hughes Network Systems provides satellite-based internet connectivity through two channels: a consumer residential product (HughesNet) and an enterprise- / government-managed services business (HughesON). On the consumer side, rural and suburban households that lack access to terrestrial broadband pay a monthly subscription for fixed satellite internet delivered via geostationary satellites, most recently the Jupiter 3 satellite (launched 2023). On the enterprise / government side, Hughes sells network solutions, often multi-year contracts, to businesses and governments needing connectivity in locations where terrestrial infrastructure is unavailable or uneconomical, including international markets across the Americas, Middle East, and Africa.

EchoStar was co-founded by Charlie Ergen in 1980 as a satellite dish distributor in Colorado. Following its application for a DBS license in 1987, the Company was granted its first piece of real estate in space in 1992. The Company launched its first satellite, EchoStar I, in 1995, and the DISH Network brand the following year, offering customers an alternative to cable TV. Through the late 1990s and 2000s, DISH grew rapidly, competing with players like DirecTV in the nascent satellite TV market and accumulating increasingly more of the broader TV market share as cable fell out of favor.

In 2008, Ergen spun off EchoStar’s satellite infrastructure assets into a separate publicly traded entity under the EchoStar name, while the pay-TV business retained the DISH Network name. The two companies shared Ergen as chairman but operated independently, with EchoStar operating the satellite fleet and technology, and DISH operating the pay-TV business.

Through the 2010s, Ergen began accumulating wireless spectrum, recognizing early on that the satellite TV ice cube was starting to melt due to cord-cutting and that spectrum represented a path forward. DISH spent billions acquiring licenses across multiple spectrum bands (700MHz, AWS-3, AWS-4, H-Block, and 600MHz) making it one of the largest spectrum holders in the United States, even though it had no wireless network. This created a lasting impatience among regulators and competitors that boiled over, marking a key turning point in this saga.

In 2020, the FCC approved the T-Mobile-Sprint merger on the condition that Sprint’s Boost Mobile prepaid brand, along with a package of spectrum and network assets, be sold to DISH. As discussed in the previous section, the transaction was designed to jumpstart a fourth national wireless competitor. DISH committed to aggressive buildout milestones: planning to cover 70% of the U.S. population with its 5G network by June 2023, and 75% by 2025.

This wireless ambition was incredibly capital intensive. DISH, which was later re-consolidated under the EchoStar parent umbrella in late 2023, invested over $30 billion in wireless spectrum alone, and the network buildout required billions more in CapEx. At the same time, the legacy pay-TV business’s decline was accelerating; subscribers had fallen from a peak of roughly 14 million in 2013 to under 9 million by 2023 as cord-cutting intensified (see the Broadcasting Deep Dive for more on this trend). 

It was against this backdrop that, in August 2023, DISH and EchoStar announced an all-stock merger, with each EchoStar share converting into 2.85 DISH shares at a 12.9% premium. The rationale was that DISH could tap EchoStar’s existing cash and unencumbered assets to provide a greater runway to fund the buildout and refinance the looming maturities. The deal closed on December 31, 2023, with EchoStar emerging as the surviving parent entity and DISH Network Corporation (“Network”) becoming its wholly owned subsidiary. Erik Carlson, DISH’s long-time CEO, departed upon close, with EchoStar’s Hamid Akhavan assuming leadership of the combined company. Ergen remained chairman and controlling shareholder.

By the end of 2023, EchoStar had accumulated over $20 billion in debt, the large majority of which was housed in the DISH silo, and Boost was still far from generating the cash flow to service it. While the DBS pay-TV business had historically served as the cash cow, revenue continued to decrease at an accelerating pace. In the face of looming maturities, Ergen executed an aggressive liability management exercise that collectively stripped significant value out of both DISH Network and DBS (a direct subsidiary of Network) restricted groups.

Here’s the Mechanics

The transaction consists of three parts: 1) creating an UnSub and transferring DISH TV satellite and all Sling TV subscribers; 2) reassigning intercompany loan receivables via an intermediate UnSub; and 3) transferring unencumbered wireless spectrum licenses.

Part 1: The Company transferred ~3 million DISH TV satellite subscribers (“DBS subscribers”) and all ~2 million Sling TV subscribers to an UnSub called DBS Subscriber Subsidiary (“SubscriberCo”). These subscribers were originally housed at DISH DBS Corp. where they served as collateral for the 5.25% and 5.75% SSNs. While the cohort specifics of these transferred assets are not public, these are probably stickier, low-churn, tail-end customer base.

Part 2: $4.7 billion of $7.4 billion in intercompany loans were reassigned to EchoStar Intercompany Receivable Co., LLC (“ReceivableCo”), which is also a directly and wholly-owned subsidiary of TopCo EchoStar Corp. Originally, DBS lent money to Network (its parent) with Tranche A of that receivable being the $4.7 billion and Tranche B being the remainder. Now, the right to collect on that has been transferred away.

Part 3: Various unencumbered wireless spectrum licenses were transferred into EchoStar Wireless Holdings, LLC (“SpectrumCo”), a directly- and wholly-owned subsidiary of EchoStar. This immediately strips value from existing DISH convertible notes as the assets now lie outside of the Network silo. Among the transferred assets is, notably, 20 MHz of 40 total MHz of AWS-4 licenses. This mid-band frequency is particularly valuable because it provides the optimal ratio between geographic coverage and data capacity, resulting in a high market valuation on a $/MHz-POP basis (total price paid for the license, divided by the product of megahertz of bandwidth and the population covered).

Proposed distressed exchange offers

As is natural in dropdown LMEs, what followed in the coming days were proposed distressed exchanges that offered existing creditors new positions secured by the dropped down assets.

Offer 1: The first offer was to exchange existing DISH 0% and 3.375% Convertible Notes at 61c and 51c on the dollar, respectively, for 10% Senior Secured Notes. These new notes were to be guaranteed by DBSD Corporation, a subsidiary of SpectrumCo, and secured by a first lien claim on the 20 MHz of AWS-4 housed there. While economics and seniority would have been improved, the proposed exchange ratios were discounts to the already distressed trading levels of the Converts and the split AWS-4 is difficult to monetize.

Offer 2: The second offer, coming days later, had two legs. The first proposed to exchange existing 5.875% SUNs for 10% Class A-1 Notes due 2030 at the newly designated UnSub SubscriberCo secured by the transferred DBS subscribers. The exchange consideration would be 95c, or 100c if tendered before a certain time. The second leg proposed to exchange existing 7.75%, 7.375%, and 5.125% SUNs for Class A-2 Notes due 2034. Exchange considerations were 61c, 45c, and 38c, respectively, each with 5c early exchange premiums as well. The former notes were offered par due to their near-term maturity and DBS’s lack of cash and timely access to capital markets; in other words, these creditors had to participate or else DBS, in its current state, wouldn’t be able to pay principal at maturity and it would be forced into bankruptcy.

Co-ops

In a typical LME, co-ops rarely materialize because borrowers/sponsors deliberately engineer first-mover advantages that pit creditors against each other. However, the EchoStar transaction was an exception, prompting the formation of three co-ops that collectively protested the transaction.

All three groups held out and forced the termination of both exchange offers due to near-zero participation.

Following the formation of the co-ops, in April 2024, the indenture trustee, serving as plaintiff for the Milbank/Lazard group, filed a breach of contract and fraudulent conveyance lawsuit in the U.S. District Court for the Southern District of New York.

From here, a second path unfolds in parallel. Here’s what happened:

Before the lawsuit was brought and three days before the 2024 Converts were set to mature, DBS sold the RemainCo subsidiary holding the 700 MHz spectrum asset to TopCo for ~$1 billion in cash. These proceeds were used to take the Converts out at par.

While the case was playing out in court, in September 2024, EchoStar announced a four-part strategy to separate the legacy pay-TV business from its wireless ecosystem, address coming maturities, and raise capital for the buildout:

All but the merger played out in the Company’s favor. The Milbank/Lazard group leveraged its blocking majority to reject the exchange terms, refusing to absorb the $1.5 billion principal haircut. Because the exchange was a closing condition under the Equity Purchase Agreement, DirecTV exercised its contract walk-away rights and terminated the transaction on November 21st. While the parent recapitalization extended the liquidity runway and cleared immediate maturity walls, the company was still left with the declining pay-TV business in addition to what is essentially an expensive refi that adds to cash drain.

In May 2025, the FCC launched an investigation into the company’s wireless licenses. The probe targeted EchoStar’s compliance with its nationwide 5G Open RAN network deployment targets, specifically reviewing its previously granted buildout extensions and its utilization of valuable spectrum.

The regulatory pressure was intensified by Elon Musk’s SpaceX (Starlink), which aggressively lobbied the FCC to reclaim EchoStar’s airwaves. SpaceX publicly accused EchoStar of “spectrum warehousing”, aiming to force a revocation so SpaceX could absorb the spectrum for its own network. The probe threatened to dismantle EchoStar’s asset base by expediting its buildout timelines and raising the existential threat of license forfeiture.

Unable to secure a meeting with Brendan Carr or raise more capital, Ergen skipped interest payments due across four separate tranches, triggering a 30-day grace period. At the end of the grace period, cross-default clauses would send the Company and all its subsidiaries into Chapter 11, effectively ending the dream of a fourth major carrier, imposing an automatic stay on valuable spectrum assets, and potentially disrupt cellular and broadband services for millions. With this leverage, Ergen forced the FCC to the negotiating table.

Without enough time to conduct a full investigation, the FCC signed off on two spectrum sales totaling around $45 billion.

At this point, the dream of becoming the fourth major wireless carrier is all but dead. To be considered a major carrier a company must own the underlying spectrum licenses and physical tower infrastructure required to route its own traffic. EchoStar now has a pure retail brand in Boost Mobile that operates as a Mobile Virtual Network Operator (MVNO), purchasing network capacity from AT&T and T-Mobile to resell to consumers.

In March 2026, EchoStar, Network, and DBS entered into a definitive RSA with the Milbank/Lazard group representing over 82% of DBS debt. Backed by the cash proceeds from the AT&T and SpaceX spectrum sales, the RSA unwinds the dropdown and cleans up the capital structure. Key points are as follows:

On June 30th, DISH DBS and DISH Wireless filed for a prepackaged (keep this classification in mind) Chapter 11 bankruptcy amid insufficient out-of-court creditor RSA participation and supposedly delayed payment from AT&T (regarding the aforementioned spectrum deal). Two months prior, DBS lent $75 million to Wireless in an effort to fill the liquidity gap. 

While DBS is a going-concern, Wireless will execute a Section 363 asset sale to liquidate what is left of the 5G ambition. With over $6 billion in general unsecured claims, a $300 million stalking horse bid (by EchoStar), and over $9 billion in diluting and structurally senior debt ($8.8 billion intercompany loan, $85 million DIP from EchoStar, and $75 million in secured debt from DBS), things aren’t looking good for Wireless general unsecureds. The intercompany loan is the result of years of funneled capital to fund the expensive buildout. Even with the FCC-mandated $2.4 billion escrow trust (the “Trust”) funded by AT&T sale proceeds, the GUCs (general unsecured creditors) are estimated to receive a mere 1.9% recovery.

Key argument points:

Regarding DBS, as noted in the RSA section above, this filing sets it up nicely to be acquired by DTV.

Winners

Milbank/Lazard AHG: By assembling blocking stakes, they made themselves impossible to prime or pit against their own paper, then held out through two failed exchanges, a busted merger, and two years of litigation. The March 2026 RSA delivered a near-total victory: full reconsolidation of the dropped-down assets, roughly $6.5B of par paydowns, a mandatory cash sweep on the 2028s, and a $125M settlement.

DirecTV: Beyond dodging a debt-laden acquisition in 2024, DirecTV now stands as the beneficiary of a clean, highly anticipated consolidation of the two largest pay-TV platforms.

The wireless Big Three: The threat of a fourth major carrier is dead for now. AT&T picked up 50 MHz of prime low- and mid-band spectrum for $23B, and both AT&T and T-Mobile now collect MVNO revenue from Boost reselling their capacity. These companies still are dealing with SpaceX related competition, but their status as a “Big Three” on land is confirmed. 

SpaceX: Lobbied the FCC into a probe, then bought EchoStar’s entire AWS-4 block plus H-Block and AWS-3 (largely with its own stock).

“Losers”

EchoStar: The company sold the crown jewel spectrum that underpinned the fourth carrier thesis after sinking tens of billions into trying to make it come true.

TPG: Its 2024 rescue package was meant to earn a generous return on opportunistic, senior secured paper. The RSA took the whole thing out at par. A caveat is that their PE PortCo DirecTV may benefit from the potential merger.

Wireless GUCs: Signed on to help Wireless build its 5G network. Set to get close to zero in return. Now litigating as a result.

A large fund size is an edge (not just a way to clip a fatter 2%). It allows for positions large enough to be the lead or sole capital provider in complex, time-sensitive situations where smaller players simply can’t clear the bar to participate. That scale buys a SteerCo seat and the ability to actively shape restructuring outcomes, providing the flexibility and firepower required to protect a thesis - or to frankly drive one in the first place. The scaled players have serious benefits nowadays. In this case, it worked out just fine for the small guys; but in classic cases of creditor-on-creditor violence, not being in the majority means you get left holding the bag.

Understand your collateral. Not all assets are worth their pro-rata share of a headline number. A contiguous spectrum block is far more valuable than the same MHz fragmented, and a tail-end subscriber base of low-churn customers is worth more than a simple portfolio-average LTV implies. 

Complexity of creditor classes and the importance of a UCC. The Wireless general unsecured class holds trade claims, unresolved force majeure litigants, and an $8.8 billion claim reassigned from an insider to a non-debtor entity two days pre-petition. Disputed claimants must win their legal fight before they’re allowed to collect, while the intercompany loan votes and collects with no hurdle. This is an example of where an active UCC is crucial, forcing discovery and contesting classification and insider votes.

For EchoStar, the equity narrative flips from wireless oligopoly to part managed decline part space-based network upside via Hughes and the SpaceX stake.

Looking forward: While the FCC’s Wireless Big 4 goal is dead for now, that does not mean there is a lack of competition. The new frontier of connectivity seems to be in space with SpaceX leveraging its newly acquired spectrum to deploy a highly disruptive, direct-to-cell network. Also, Rocket Lab’s $8 billion acquisition of Iridium Communications creates a vertically integrated competitor that pairs launch capability with enterprise and government communications services.

$SPCX ( ▼ 3.31% ) in particular has traded off quite materially, but even with Space stocks down 50%, we expect this will remain an industry with significant investment and distress over the coming decades.

Until next time.

Join High Yield Harry’s Community. Made it this far? Make sure you join fellow investors in the Community.