Colorado’s Richest Man: How Charles Ergen’s Fortune Grew $5.5 Billion In A Year
Charles Ergen, cofounder of Dish Network in Washington, DC in 2004.
Cord-cutters — who needs them? Annual television subscriptions at Dish Network have fallen three years in a row, but cofounder and CEO Charles Ergen isn’t losing sleep over it. In fact, he’s the richest he’s been in years.
With a net worth of $18.8 billion, Ergen, 64, maintains his spot as the richest person in Colorado. He’s up $5.5 billion, a 41% increase from a year ago, and is the biggest percentage gainer of anyone on this year’s Richest By State list. (His net worth last peaked in March 2015 at $20.1 billion.)
Dish Network stock, which makes up about 83% of Ergen’s fortune, has steadily risen 22% in the last 12 months. Meanwhile, shares of satellite-manufacturer Echostar Corporation, which makes up about 17% of his wealth, are up 60%.
But with falling subscribers, and a nearly 4% drop in revenue to $3.68 billion in the first quarter of 2017, Wall Street has been banking not on Ergen’s satellite dishes, but rather his other bet: wireless spectrum licenses.
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Sold and regulated by the Federal Communication Commission, wireless spectrum is essentially the way that mobile carriers, like AT&T and Verizon, transmit your smartphone data through the air. It’s licensed by the government because no two carriers can transmit over the same place at the same time. It would cause an interference in service. As more people use smartphones, more data — and wireless spectrum licenses — are needed. Meanwhile, the number of available licenses is limited.
“The reason I sleep at night pretty well is that all those people have one thing in common,” Ergen said of consumers who are dropping satellite subscription services during Dish’s earnings call on May 1. “They need to be connected.”
And Ergen appears to have a plan to connect them. Since 2008, Dish has invested more than $20 billion in wireless spectrum licenses. Trade publication FierceWireless reported in May that Dish has almost as much spectrum as T-Mobile. In November 2016 a J.P. Morgan analyst report stated that the firm believes that the majority of Dish Network’s value is in its spectrum holdings. Jonathan Chaplin, managing partner at New Street Research, says that Ergen’s “formidable portfolio” could be worth as much as $80 billion — more than double Dish’s current market cap — if sold.
“He’s sitting on about 13% of Manhattan right now,” Chaplin says of Ergen, speaking figuratively. “And every other square inch has a skyscraper.”
Over the past year there has been both analyst and media speculation that T-Mobile or Verizon might be interested in buying the spectrum from Dish or partnering with the company. Recently, reports came out in late May that Amazon might consider a partnership with Dish to access its spectrum.
Despite the rising share price, not everyone on Wall Street is so bullish on spectrum. Tom Eagan, managing director at Telsey Advisory Group, considers Dish’s stockpile to be more of a risk. A Telsey earnings review from May 1 states that if Dish is unable to sell its licenses in the next few years, the company may have to finance building the wireless network on its own, or face losing ownership entirely. The FCC doesn’t allow companies to hold spectrum licenses indefinitely.
However, in March Dish issued a report to the FCC discussing plans to build out a faster 5G network that would serve Internet of Things devices by the FCC’s 2020 deadline.
“I tried to get everybody in the world to build us a satellite. We were launching DBS [direct broadcast satellite] and nobody would do it, so we got in the satellite business and built them ourselves,” Ergen said during the May earnings call, comparing the build out of the wireless network to when he was getting started in satellites.
Raised in Tennessee and a former financial analyst for Frito-Lay, Ergen is no stranger to risk. He’s also a former professional gambler, and reportedly got thrown out of a Las Vegas casino for counting cards. He eventually made his way to Colorado where he and his wife Cantey started the business in 1980, peddling the dishes out of the back of a truck in rural Denver.
“Part of management,” Ergen said in the earnings call. “Is to figure out how you’re going to do things, and to be creative on how you’re going to do things, and to prove the skeptics wrong.”