Yet Another Value Podcast - Yummy Century Egg's Guowei Zhang Echostar follow up $SATS

Episode Date: September 8, 2025

In this episode of Yet Another Value Podcast, host Andrew Walker welcomes back Wei from Yummy Century Stocks for a follow-up on EchoStar/Sats. They analyze the surprise $23 billion spectrum deal with AT&T, what it means for the rest of the spectrum portfolio, and whether liquidation or a new satellite venture is next. The discussion touches on cable’s strategic options, risks of regulatory interference, and shifting dynamics in fixed wireless and spectrum valuation. They also explore ongoing broadcaster M&A and close with a candid conversation on value investing psychology, bagholding, and lessons from QVC.First SATS podcast (episode 322): https://www.yetanothervalueblog.com/p/yummy-century-eggs-guowei-zhang-on?r=a7n3&utm_campaign=post&utm_medium=web___________________________________________________________[00:00:00] Intro, guest, EchoStar background[00:03:38] AT&T spectrum deal overview[00:06:36] AT&T overpaying and implications[00:09:11] Fixed wireless reshapes landscape[00:14:07] Cable’s possible DISH spectrum move[00:20:12] Why EchoStar shuts down network[00:23:31] Spectrum value and liquidation path[00:31:27] DOJ vs. FCC spectrum concerns[00:38:53] Broadcaster M&A wave begins[00:48:48] Affiliate value vs. disruption[00:52:38] Bagholding and QVC psychology[00:59:05] Closing thoughts and wrap-upLinks:Yet Another Value Blog: https://www.yetanothervalueblog.com See our legal disclaimer here: https://www.yetanothervalueblog.com/p/legal-and-disclaimer

You're about to listen to the Yet Another Value podcast with your host, me, Andrew Walker. Today's episode, we have Way from Yummy Century Stocks back on the podcast. We did a podcast about a month ago on Echo Star slash SATs, and a ton of news has happened. I mean, the stock is up a absolute ton, but because they did a massive spectrum deal, and we talk about everything. We talk about the spectrum deal. We talk about the go forward paths, the risk, the opportunities, all that sort of stuff. And then we end the podcast with a quick little discussion.

that I really enjoyed on first broadcast affiliates with the next Rtecna deal, and then a little bit on bag holding and, as I like to call it, sucking your thumb and trying not to, you know, losers, average losers and all that sort of stuff. So it's a really informative podcast. I've said it several times. Yelmi Century Stocks is the best substack to launch so far this year. You should absolutely subscribe, follow it if you're not subscribed and following it. You're really going to enjoy this one.

We'll get there in a second, but first, a word from our sponsors. Today's episode is sponsored by Alpha Sense. Look, over the years, you've heard me talk about it. Nonstop, Alpha Sense, Tegas, they've become core to how I do investment research. They've got a burgeoning set of AI tools. They've got the expert calls, which I absolutely love, the expert call library. They've got over, as they tell me, over 500 million premium sources from company filings, broker reports, news, trade journals, everything, plus the expert calls. They put it all in one place.

Their AI tools lets you search unique data sources in really interesting ways. This October, they're hosting their first ever Alpha Summit, 2005, and Brooklyn. I'll be dropping in and out. So the event will feature all sorts of leaders from finance, UPS, Wells Fargo, essential, Google, who's who are going to be there, sharing how AI is reshaping the investment research and decision-making landscape. What's going to make Alphison special is it's just not just about the ideas, it's about really talking about how AI can improve workflows

and the strategies that top firms are using right now. So I'd love to see you there. If you're going, you can join me there. AlphaSense, Alpha Summit, 2025, October 6th through 8th at the 3rd. refinery at the domino you can sign up at alpha sense.com slash yavp that's alpha dash sense dot com slash yavp all right hello and welcome to yet another value podcast i'm your host andrew walker with me today i'm happy to have on for the second time and it's been pretty fast too this might be the fastest repeat appearance we've had way from yummy century stocks way how's it going

good to be i'm doing great before we start this podcast off disclaimer remind everyone nothing on this podcast is investing device we're going to be talking maybe a couple things today, but particularly stats. I've got a little position. I don't know ways position, but please do your own work, highly leveraged situation. It's wild over there. It's truly the wild wild west. And the second disclaimer I'll give is I've said it several times on this podcast. Way, right, jumpy century stocks. It is literally the best subset to launch this year in terms of investing. So I might have been your first subscriber. I don't know, but go subscribe if you haven't. The analysis is absolutely fantastic. So unless there's anything else you want to talk

about, let's hop into Sats. Let's go. That's go. Cool. Thank you. I said, thank you for the kind words, by the way. They were well-deserved, so there's no need things on them. Look, wait, we did a podcast about a month ago on the burgeoning situation over at EchoSar Sats, this, whatever you want to call it. They announced a big spectrum sale a week or two ago to AT&T.

So I'd love to just pause there. People can go listen to the whole thing that we did. I'll include a link in the show notes, the whole first thing for an overview. But it's really worth an update on what happened there, what the go-forward path is. So I'll just pause there and say, hey, spectrum sale to 18-T. What was it? Why is this a big deal? All that type of stuff.

Yeah, yeah. So, I mean, just to give like a 30-second background. So this story has been ongoing for the last 15 years, this portfolio of spectrum that was accumulated by Charlie Ergen. And it's always been, there's value there. It's always been trapped inside of SaaS and Dish over. these 15-year periods, and it's just started to come out. This value started to be realized. So that's why it's so significant. So the update is that AT&T came in and paid $22.7 billion for two parts

of the spectrum. There are more in the portfolio. I would say that's about, in terms of a value, that's about a third of the portfolio. So there's still two-third of the portfolio that haven't come out yet. But that's the start. You know, that's a fairly large deal. It was surprising at how quickly it was put together. I was expecting, you know, them to take a longer period of time to put that deal together. But AT&T came in, a pretty high price for those spectrum without an auction. So they, I guess, I'll bid everyone's expectation because they wanted to get it first and early without going into an auction process.

And that worked out for Erging and SaaS at the end of the day. So, again, I really would encourage people to either go listen, actually, not either or do both, go listen to our first podcast and then go read everything Yami Century Egg has written on this, including particularly the most recent pieces, because it is hard to talk about this without some background. But let's have an step. Just on the spectrum cell itself, to baseline, AT&T paid, I believe it was $23 billion for, this is the 600 megahertz and the 3.4 gighertz spectrum.

You have done great work on each and every block of spectrum that dish slash Sats owns. What did you think the spectrum was worth just the baseline for people? Yeah. So the 3.45 gigs, I thought that was worth $8 billion. They just bought it in 2022. So it's a pretty recent auction. So I didn't give them a lot of premium on that. They paid $7.3 billion for it.

So I said, you know what, $8 billion, I'll just round up. There's really no, you know, transactions, right, other than those auction numbers. And then the 600 megahertz, I had $10 billion for that. Now, they didn't break out how much they paid for each piece in the press release and the call afterwards. But I'm assuming if you paid $8 billion for $3.45, that's, you know, $15 billion for 600 megahertz. So that's a 50% premium. And that's, you know, if you look at the ranges of expectations, that's at the very high end of the market.

So people had anywhere between 10 to 15, 16 billion for that piece of the spectrum. What impressed me the most about it, and there were a few things. But number one, you mentioned that the 3.45, it was, it was 2012 was when they bought it, right? Yeah, yeah. It was a recent bit. And one thing I had always worried about, and people can listen to the last podcast. I've always been, as a longtime Dish Bowl who just like, you know, the monetization story has been there for 10 years. I've always been like, hey, if it hasn't happened now, when?

And then the other worry you would have in the back of your mind is, look, every price that you saw happened at an auction where there were four players, right? Dish was your fourth player than Verizon, AT&T, T, Mobile. And you worried when you kind of pulled the fourth player out there and you were left with Verizon AT&T and T Mobile, who are all against the spectrum cap. you kind of worried that the competitive dynamics fell apart. So to me, one of the interesting things about this bid is a recent bid where the fourth player was the winner in the 3.45, it seems that at minimum they got costs and probably a premium for that. And that was just, to me, just one of the most bullish signs because, again, the fourth player is gone and the largest players are saying, hey, we need the spectrum so bad, we'll pay big premiums to this stuff that just went off. If you have anything to add or disagree, agree, I'd love to hear it. Now, I think the 3.45 gigs, when a dish bought it three years ago, they paid a very good price, I thought,

because the auction dynamics were such a way where they benefited from, I guess, a slightly reduced competitive pressure. And then AT&T really needed that spectrum because AT&T was the other big winner in that auction. So, you know, that fit very well with AT&T. AT&T is short mid-band spectrum, so that deal looked great. I mean, that was what everyone expected, and that just happened. But the 300 megahertz was, sorry, not 600, 600, 600 megahertz. That was a little bit strange because AT&T doesn't need that. They paid a big price for it.

And on the call that they had after the announcement, they said that it would take them several years for that 600 megahertz to be put into use, which is, I mean, shocking to me that they paid up such a big price. for that part of the spectrum, which comes back to your point, which is that the spectrum market has reset based on these two transactions. And it's reset higher, right? And I don't know what the competitive dynamics are for the remaining spectrum, but I would say it's better than where we were a month ago.

Let me pause you there, because I agree, it's reset higher. It seems like that's the case. And we'll talk about the rest of the spectrum, the other bidders, all that sort of stuff. But I did have one bear who emailed me and said, hey, everybody at Sats is celebrating right now and rightly so, right? This was a big price. But when you're starting to think about the rest of the spectrum portfolio or deals, remember the one, there are a few constants in life. There's death. There's taxes. And there's AT&T wildly overpaying for telecom assets whenever they have the chance. So they were kind of saying, look, you had the sucker here. They did the first blowout bid. But as you go to the rest of stuff, I mean, it's teams, 18T won't be around to bid for the rest of the stuff just because this was a big deal. This probably takes them out unless the rest of the stuff is going for a real song. They're saying, look, Verizon and T-Mobile are going to be much more disciplined buyers, like, kind of dial back your expectations on those because now they know there's only two players. We're the last game in town and nobody's going to pay 18-T.

I thought that was an interesting zig to the Zag. Go ahead, please. I would push back on two points here. One is that Verizon is not a discipline. plan buyer in the market. I just had to look up who bought Strip Pat, A10 Tier Verizon to remember which one. So when you say not this, yes, yes, yes, yes.

Verizon was the winner in that bidding process, okay? They way overpaid for that. They went crazy for that one. And they paid a lot for CBAN, right, back in 2021. So I wouldn't say they're conservative by any means. So that's one point. The second point is AT&T in their call said that after paying $23 billion for these two pieces of spectrum, they're actually accreted to earnings, which is shocking to me, right?

Because two-third of the price was for 600 megahertz, which they won't even put into use. So what they're modeling is using 3.45 gigs for fixed wireless. That's what they said on their call. So that's going to make them, you know, make the deal accretive for them, which to me feels like they underpaid for the spectrum, right? So I don't know. Like I feel like you're right from a competitive standpoint. One guy is potentially out of market.

But on the other hand, if you look at some of these use cases, I don't know. I mean, there's still value there, right? 18T could have paid more for those spectrum if they wanted to and still make the case that it's, hey, you know, accretive or not dilutive to earn. I do hear you, though, you do wonder about the fun with math and games of like buying spectrum and what they're saying. But let me stick on the AT&T use case for a second. I was going to see this sooner later, but I'm going to talk.

AT&T on the call comes out and says, hey, like they really started pumping up fixed wireless assets, fixed wireless assets with this, you know, wireless internet, basically, for those who don't have. They really started pumping it off. And it's been interesting to watch their evolution on FWA over the past five years. You know, AT&T historically was the most opposed to it. And over the past couple of years, they've warmed up to it. You know, they started saying, hey, it's a great bridgeway for places where we have copper.

I would say with this deal, they really warmed up to it, right? They're still not seeing it's full speed ahead. They still want to do fiber. But they're really talking about it. I thought that was interesting from a lot of competitive angles. You know, we can spot cable. We can talk anything. But I'd just love to ask you, just high level, as you see AT&T by this big block,

and this is really the 3.45 that they're using for the FWA. But you see this and you see their tone change on fixed wireless. Do you think that has any read-through to just across-the-board competitive dynamics? Oh, absolutely, absolutely. I mean, the first thing that came to my mind was cable, you know. Yes. It's been getting killed by fixed wireless. Now you've got a big player coming in who's just going to take more market share from them.

So that's a concern for cable. I mean, the risk has been there for the last three to four years, but now you've got a big guy coming. So it's not just you have a big guy. I mean, you have T-Mobile who's been doing it, like they were the pioneers. Verizon's really started ramping it up. And now you kind of look at it and you say, it seems like AT&T is going to ramp it up, right? And you've got cable going from monopoly in every market to doopoly, cable versus fiber.

And it seems to me like you're going to have cable kind of in a oligopoly. right? It's going to be cable versus a fiber player. And those two will probably be converged. I think you and I defer a little bit on the cable, Mbino and the converge side. But then you're going to have in every market, 5% of that market is going to get really attacked by T-Mobile's fixed wireless. And if AT&T is the fiber, Verizon's fix wireless, if Verizon's the fiber, the AT&T's fixed wireless. So it seems like you go all Goplin. That's really tough situation. Hey, listen, like, I'm doing a series on cable. I haven't gotten to the meat of it yet, but I mean, the gist of it is if you look at all these guys and their plans

for fiber and fixed wireless for the next five years, and you scratch your head and say, hey, there's like, you know, 40 million, you know, customers that they need. You know, it's going to come from cable. So, I mean, this is a big deal for cable, right? I mean, over the next five years and you just see AT&T spending a lot of money to try to attack it more. As a look at I'm with as a long time capable like you see AT&T really add into that add into there and you say hey like what is what is kind of left like it seems like for years you said hey once the fiber built else happen and the fire rebuilt else have it's tough to say peaks but like it's not going to get much more competitive right cable is already 60% overbuilt by fiber is probably going to 80% but you've probably seen the impacts the issue is now you're saying hey All of our markets going from zero fixed wireless to it's going to be two players, maybe three players.

Like, it's a lot of competition left to come. And it's concerning. Yeah. Yeah. But you do wonder on the other side, and this might ties back to dish nicely, hey, if cable is looking at this and saying fixed wireless is coming, we need a competitive response. The response cable has been saying for the past five years has been conversions, and that's relied on the Verizon and B&O. you know, if cable wanted to take it a step further, I increasingly think the remaining dish spectrum, I mean, cable might be the bidder, right? And then you say, hey, you get the AWS spectrum,

use that to power, and then you can still rent the network from Verizon 18 to whoever's going to be your MD&O in more rural places where you need less. But maybe you're talking about, hey, it makes sense for them to go and really start this build out if it's going to go converged. I don't know how you, where you fall on that? You know, I think the 600 megahertz deal is a pretty big deal because that's the spectrum that they need for coverage if they want to start owning network assets. So with that 600 megahertz out from the market, cable is put into a tough spot. You know, there's no real major alternative for them to have that low band coverage.

So that's... Do they need low band though? Because I think you could still rent. Because low band is mainly voice, right? So I think you could still rent that on decently attractive from Braz and T-Mobile AT&T and just offload. Like, do you really need low band? Can't you rent that?

They can lease it. Yeah, I think of Lisa, but I mean, you know, it's a bit strange, right? I mean, I feel like the low band is more important than the midband because that's coverage. I mean, you need it to work everywhere, right? If you have a blotchy network, then the cable guys are not going to be competitive in this product. So the low band, the coverage is really important. But you're right, they can lease it from AT&T. It's just a weird deal because AT&T doesn't need it.

It's kind of like very, you know. I was basically thinking if you took what cable is doing right now to its most extreme, right? Because right now, cables on the Verizon thing, and they're trying to offload as much as they can in the heaviest spots. I was thinking basically, hey, if you take CVRS and then you buy the dish spectrum and you run that four or five years and all the heavy spots like you're trying to offload and then you use, whether it's Verizon, AT&T or T-Mobile, you say, hey, wherever we can't build coverage, we rent the network for you. That's kind of what I was thinking. Yeah. Yeah. It could work if they want to own the, you know, if they want to own network assets. I'm just not, I don't know when they're going to actually make that decision, you know, and whether now it's a right time. for them to bid, I don't know, $30, $40 billion for the remaining assets that they have.

So, you know, I hope they're in the process, but I'm not 100% sure. And, you know, if you talk to a lot of cable shareholders, they don't want mobile, right? I mean, they're kind of negative on the whole space. And I don't know from their perspective, they don't view that as a good capital allocation strategy. And I don't disagree with that.

I think it's a big decision. If I were a cable, I'm not a long cable, but if I were a long cable, I would be very concerned if Charter goes and pay, Charter and Comcast go and they pay $30, $40 billion for the spectrum. No, you know, I don't disagree because it's not just the $30, $40 billion spectrum, then they'd have to go build towers or rent, like there's a lot of tack on to that, though it is interesting, right? Like cable does have a fiber-rich network as any cable company would say, hey, if you have, get broadband, you know, 90% of your data at this point is going over your broadband subscription. 10% is going over your wireless, but you're probably paying more for your wireless line than your broadband. Like that is a natural argument for convergence. And we're sitting here saying, hey, fixed wireless access, which is going to take 5% broadband plus the mobile is eating cable's lunch. Like, it seems weird that they're in a spot where we're credibly saying, hey, they can't go by the spectrum to get fully converged.

And by the way, they're getting their lunch eaten by the fiber player plus the piecemeal fixed wireless players. Yeah, it's really no good choice for them, right? I mean, either they pay up for the spectrum and, you know, do the buildout or, you know, they get their lunch even. But then again, you know, 600 megahertz is gone. And the spectrum and the network assets that Echo Star has. they're getting shut down. So I would assume, you know, EchoStar has had conversations with cable and they're not interested. That's why the whole network is getting shut down.

I mean, think about it. Echo Star spent $10 billion, probably not $8 billion on their network assets at this point. That's a lot of money that, I mean, that's gone, basically. Actually, that's a great point to come back to because I want to talk about Echo Stars go forward and the hybrid M&O and everything. But, you know, I know so people, I think you might have mentioned it, who thought that, the end game for this was the cable operators banding together and just buying boosts, right? There's $10 billion. That would get them the fourth network.

Now, they would have to pay for the spectrum, everything, but that would get them instantly running day one with the network nationwide that had been invested. $10 billion in the ground, let's say they paid $5 billion for it. Let's say they paid $12, whatever. But are you surprised that this was the end game versus the cable buying and going into the fourth player mode? Yeah, yeah, I was surprised by it. mainly because they, I mean, spent a lot of money and effort and technology.

They put into this very spanking new network that's supposedly very valuable, right? No one else had this open-er-end network. And, you know, I mean, I'm more realistic than a lot of people, you know, in the marketplace about this network, but there's still some value there, and they're just literally going to take the radios down. And that was shocking to me. That's a lot of waste of capital. that must mean, to me, that must mean that cable is not interested, right? That just, I mean, why give that up?

It's just, it's funny to me because if you and I were having this conversation a year ago, right? Now, the conversation would have always centered on the spectrum value, right? But the Bulls would say, hey, they've got the spectrum, it's untapped, and they put $10 billion into, as you said, this brand speaking new, completely modern network on, you know, unburdened by legacy voice and all this sort of stuff. And it's going to the moon because they've got this new network. And here we are a year later. The network was literally worthless, right? They're shutting it down. They're giving the spectrum over its 18T. Cable apparently wanted nothing to do with it. And the stocks are triple because this spectrum was so valuable. It's not cost Echo Star to take to take everything down, right? Because all the, all the

tower leases and stuff. And that's not cheap. a very expensive process. So I was, you know, I don't know. I mean, that's just a complete waste of capital, right? Let me go. Let's go back to Echo Starts go for it. So let's start with the rest of the spectrum, right? The, there's an article. This deal gets announced. I think it's on Monday. The stock screams higher. And then aftermarket the day that the deal's announced semifor comes out with an article that says, hey, T-Mobile was sniffing around these, SpaceX. was snipping around. There's a lot of spectrum left.

Both of those players are very interested in the remaining spectrum. I love to just ask, what do you think the remaining such worth? What do you think the go-forward's path here? Actually, if I can put one more, there is an open debate on the go-forward path of, is this a liquidation? Is the candy shop open and we're selling all the spectrum? Or is Charlie going to pursue, I think you put in one of your posts, is Captain Ergin going to pursue his whale and go build up the D-to-D,

satellite business, spend $5 billion, keep the spectrum and try to build a business. So I threw tons of stuff out of you, but I'd love to hear what you think about the GoFord spectrum, this GoFord Echo Star here. Yeah. So first of all, I'm very interested at this point about the stock. The stock's risk reward is a lot better now than before, even though stock has gone up.

Okay, so the reason for that is I think the stock is worth triple digits at least. and the reason is that just from a very simple back of the envelope math perspective, they sold $23 billion of spectrum. There is $11 to $12 billion of spectrum outside of AWS4, right? That's going to get sold one way or another. You add that up, you take away taxes, you take away debt. That gets you to low to mid-50s in terms of stock price,

which is not that far from the current stock price of $62. So you've got pretty good downside protection. I mean, this is a liquidation, right? I mean, and you're going to get 50, let's call it 55 bucks back in the next year, right, year or two. So that's pretty good downside perception. On the upside, you have the crown jewel, the AWS4 spectrum. That's the two gigahertz spectrum. That's worth probably $26, $27 billion on top of that.

And that's 80 bucks of value that needs to be realized. Now, so the question is, how do you realize that value? My perspective, the base case is that because they're not running a network, the AWS4 spectrum now is in limbo with FCC. Because the FCC has these build-out requirements, right, for your spectrum. You own the permit. You own the license, but that license has conditions, build-out conditions to it. Now you don't have the network.

you're not running the terrestrial network, everything else you do in the future with this network has to be approved by the FCC. So the question is, what does FCC want to do with the spectrum rather than what Ergen wants to do with the spectrum to some extent? So I think that the FCC probably wants it sold, right? Yeah. Free up the spectrum. And so the other option, like you mentioned, is Ergen on their second quarter, not Ergen, but the CEO Hamid on the second quarter earnings call said, that they wanted to go into D2D Leo satellite business. They're potentially going to spend $5,000

investing in this business, and we're going to be a wholesale provider for the global network operators, basically, providing, you know, D2D connections in places that don't have cell coverage right now. And I guess the idea is you provide service to the network operators, you save them KAPX because they don't need to have towers in these places anymore. So it's a good value add for them to offer. And in order to do that business, you need the 2 gigahertz spectrum.

Now, there are two pieces to that 2 gigahertz spectrum. One is the terrestrial part. The other is the satellite part. So they're authorized to do both. So you can see a scenario where Ergen either sells the terrestrial part or leases the terrestrial part. to a mobile operator, and then he'll use the MSSS part, the satellite part, for their D2D business. So that's one scenario. I think that's a good and efficient use of the spectrum.

I'd much rather see it being sold and having the cash come back to shareholders than having urgent lease it. But that's one solution. What you don't want to see is the whole spectrum, the terrestrial and the satellite part, stuck in SaaS or Ergen to invest in this D2D business, which frankly, I don't have a very good

I don't have high expectations because they're competing against SpaceX and you know, Amazon, they're at least five years late to the party and they don't have any know-how in running Leo satellites.

I mean, they do geo-satellites, which is a completely different business. And they don't have the people, most importantly, they don't have the people that I've seen that can actually operate a Leo satellite constellation that's got hundreds, if not thousands, of satellites globally, right? Look, this is the word, right? I think, again, you and I talk the day this happened, and you said, hey, once someone starts going down the path of liquidation, they tend to follow through. And I think it was a different show to me this. Look at U.S. cellular once they started selling, they fall through. But the counterpoint to that was, look, Charlie's been building the spectrum for a year, for years, over a decade.

His hands were basically tied, right? He was forced to sell this because of regulatory pressures, balance sheet pressures, everything. But he, maybe he sees this and he says, look, if I go build this D2D thing, I've got the cash. I've got the proof if I do this, these things just get more and more valuable. Why would I sell now when if I do this D2D thing, maybe I can, you know, hit a grand slam. and if not, the spectrum value will be there in eight years or something. And while I do hear that, I think as a shareholder, potential share or whatever, that's terrifying, right? Because then you're just, you're...

Yeah, I'm really hopeful. Yeah, I'm really hopeful that FCC won't allow him to do that because they don't want this getting stuck for the next five years, right? And they've had experience with them with holding the spectrum, building this, you know, this dream. and it doesn't work because he's late to the party. He was laid to the mobile party, and now he's going to be late to the satellite, D2D party. So, you know, and, you know, importantly, it's not efficient for Ergen as well

because that whole spectrum is worth, let's say, $26, $27 billion. You're holding it for five years. You know, the holding cost alone is ridiculous, right? I mean, you have to piece it or you have to sell it, And let's say, turn off this alarm here. Got that? No. Okay.

I can hear you. Okay. So, you know, from even if you don't assume the hold, the cost of holding this spectrum, you need a big business to support 26, 27 billion of spectrum, right? You need, I don't know, 8% ROI on that on an unlevered basis. That's $2 billion of unlevered net income. income. And five years from now, the cost to build out, I mean, you've got to, you've got to have line aside. I'd say to five billion of operating income to justify this. And show me a satellite

business that's throwing up five billion of operating income. By the way, when you're competing with, as you said, SpaceX and Klaper, you know, five years ahead of you, he can do it because he can drill as the company. But, you know, the worry is he did it once before with the wireless network, but it seems insane to me. I have no idea how you can justify it. Yeah. So I'm really hopeful that the FCC doesn't allow him to do that unless there's some sort of a deal where there's a big government contract, there's some defense angle to this

constellation that he's building, hopeful to the overall objective of the administration. There's something. There has to be something, right, that would allow that would say, you know, hey, it's reasonable for Ergen to hold this spectrum and build this thing, right? And I just, you know, that's not my base case. My base case is the continued liquidation, especially because he's not in the terrestrial mobile business anymore, right? And he doesn't have leverage.

He can't just go out and say, hey, I'm doing this satellite business. I'm holding this spectrum. No, he can't do that because he has to get approval from the FCC to the future use of the spectrum. So the biggest risk when I talk to people is the risk of, They're just worried Charlie's going to chase the whale with the satellite business. And the spectrum, the spectrum sale emboldens him to burn billions and think that he can, you know, just roll a Yolo at the end and turn up.

The second biggest risk I've heard, which I do think is interesting. And the market in my mind is giving zero risk, very little risk to this. But I do think there is some, it's the DOJ risk, right? The DOJ has historically said the wireless business needs for competitors, right? AT&T, T-Mobile, Verizon, and then Dish, boost, whatever it is, is supposed to be your fourth business. That's gone. They're doing a hybrid M&O with AT&T, whatever it's going to be. The fourth business is gone.

FCC clearly wants the spectrum in other people's hands, but the DOJ could come out and say, hey, no, you can't shut boost down. You can't do the sale because it results in a three-player marketplace. I'd love to just, and I think you even had a quote from somebody pretty high up at the DOJ two months ago. saying, hey, we need four players in this marketplace. So I'd love to ask you, what do you think about the DOJ risk here? Like the DOJ and FCC, it seems clear they're at odds with what should happen here. What do you think about the DOJ?

Yeah, I think the DOJ, the more I think about the DOJ risk, the less I'm concerned about it. And I think the DOJ has no other choice but to approve this deal. They would like to have a fourth functioning network. They would like to have the spectrum sit there for, if not boost, but some other fourth network to come along and use the spectrum and provide competition in the mobile market. But that's just not reality. There's no one out there who's willing to step up other than cable. And so I think what else are they going to do, right? If they could block the transaction, in which case, Ergen, which is filed for bankruptcy, the spectrum will get stuck in court for years.

I mean, it could be years. And when it comes out, if it comes out, the three bidders are going to be still the three bidders today. So there's not, no one is going to come in and say, hey, I want to be the fourth network anymore because, hey, look at what happened to the dish, right? You destroy so much value by blocking this transaction. Now, they can't realize value on their assets because of your stupid ideology on this fourth network. It doesn't work. So the DOJ knows this too, right? So I think they really don't have a choice.

What they can do is structurally, you know, find some ways to save face and to provide some support in terms of stronger MV&O agreements to provide semblance of additional competition in the market. But as of now, I don't know. I mean, what else do, right? Look, I'm with you. I think, now I will say I think the DOJ's original sin here was allowing Sprint T-Mobile to merge, But look, that's in the past.

You can't do anything about that. I don't know what, I feel like the DOJ is just completely checkmated. Cool, you want a fourth network while you let you basically let the company, the country get down to three. Nobody wants to go build the fourth. Like there's nothing for you to do. I do think your behavioral remedy's issue is interesting to go back to cable. Like, you know, as part of the T-Mobile Sprint Transaction, T-Mobile and Sprint, we're very heavily

arguing, hey, cable is here. Cable is a competitive player as well. I wonder if as part of the behavioral remedies for this deal, cable gets a new real sweetheart deal with AT&T on the MV&O side that, you know, I think they're MV&O with Verizon's pretty good, but I do think Verizon can dial it back if the network's overstrained and stuff. I wonder if they get a very sweetheart deal with AT&T to create some competition there. Great for them. It's great for them.

I mean, they would be highly supportive of this deal because I don't think they, I mean, they may be forced into owning. network assets, but I don't think they want to at the end of the day. And this, you know, if they get a sweetheart deal from these MNOs, I mean, it's perfect. Great. You and I are recording this. Let me make sure I get the day right. September 3rd, the Paris show, which everybody's pointing to, you know, you go back to the Echo Star Q2 call. They said, we're going to have announcement at the Paris show. Every Sachsville I talk to says the Paris show is coming. Get ready for the Paris show. I think the Paris show is the week of the 14. Am I remembering that correctly?

I think, yeah. Yeah. So I just love to ask you, are you expecting fireworks at the Parisho? Are the fireworks already in the past? Like, how do you, because I just know the Bulls are always pointing to the Parisho for, you know, we might see more. What do you think happens there? Yeah, I think, you know, I think they will have to announce some sort of resolution on AWS4 at the Paris show. That's the thing that I'm most focused on is what?

and how they're going to realize value on AWS4. With respect to D2D, I don't really, I mean, it doesn't really matter to me. I mean, that's the value that may be meaningful in the future. But at this point, I just want to make sure that, you know, we get to, I don't know, $100 a share with just the spectrum value that's going to get liquidated, right? That would make me feel comfortable about the near term.

So I, but having said that, I think what they're going to do is, some sort of partnership on the D2D side. I mean, the second quarter earnings call, they alluded to the Paris show a number of times. They said a couple times that just wait, we're going to have some new stuff coming, right? So you would assume that that's going to be some sort of a partner on the D2D business. And then AWS4, I mean, that's going to be the natural question for everybody is, what are you going to do with AWS4? Now, I thought it was interesting that, you know, they announced that they're going to shut down their

network before finding a deal for AWS4 because that, but if I were a buyer, I'd be like, okay, you know, you got to sell it anyway. So there's leverage for me to, I don't know, just, you know, negotiate a lower price. So I would assume they probably have a deal pretty close to being signed at this point, right, in order for them to come out with AT&T and say, hey, we're not going to be in the month in the terrestrial business anymore. And look, maybe that's part of YAT&C pays the premium, right? They get the first strike. They say, hey, look, we're paying a little bit of a premium because we've got to start rejiggering our network now for the 600 megahertz that we're buying. And we'll pay a little bit of premium because we're hurting your

negotiating leverage with the AWS4. And we realize that. But we, you know, speed is a factor here. And getting a three-month head start in the regulatory process, the closing, the read, might be worth them. Let me, I want to quickly switch to, unless you have any closing thoughts on stats, I actually want to talk about two other things you've written about quite a bit recently. Yeah. So I just want to say the risk reward here is fantastic, in my opinion, much better than a month or two months ago when we spoke first. And I know that sounds weird, especially for value guys. But it's true. I mean, and you have this near-term catalyst here. So you're going to know in the next two or three months whether this thing works or not. So it's pretty interesting opportunity. I'm with you. It's a struggle because it's always a struggle to buy. I mean, the stop was 55 last week, at 65 now. It was 25 a month ago. But one thing, you have to factor in a lot of things. This is a complicated structure. So a lot of the value they've sold. This is a highly leveraged business. But a lot of the value they sold is actually going to pay down hold co notes. So you're actually transporting a lot of cash up to the hold co. So you're really, as you said, taking, you're really boosting the downside. Because of that hold code note structure where, If everything else goes wrong, you're still going to have value because of that cash. You've eliminated, I mean, even at 25 a month ago, after the Trump sit down,

after your worry was Charlie was going to go full speed ahead, we want more spectrum. We're going to build this out, right? And those are mainly off the table, so I'm with you. It's very interesting. And the spectrum value has gone up. Another great point. Another great point. Two other things.

Quickly want to mention, you've been covering really extensively M&A and the broadcasters. For those who don't know, next are best, and one of the best runs companies in the companies, bar none, like forget broadcasters, just in general best run companies. And now says to build deals by Tegna, Broadcaster, M&A is back on. I just love to get your thoughts on. There's a lot of moving parts around there, right? Sinclair, the night before the Tegna deal breaks, Sinclair's rumor to offer $25 to $30 per share for Tegna. Now, that was stock, it involved the split-off, but Sinclair is looking to dance. Gray, I think, needs a dancing partner.

There are a few others out there. I'd love to just hear your thoughts on where we're kind of falling in the broadcaster M&A. Yeah. That's going to be really interesting next 12 to 24 months because the broadcasters need to consolidate in order to compete against tech platforms. And the SEC is willing to allow them to do that. So you got this mix where people, you know, are ready to combine, basically. Right now, the market is fairly consolidated, but, you know, Next Star is the biggest,

and there are four other public guys, and they're a handful of smaller guys. I think over the next 12 months, they're all going to come together into two big station groups. You know, they're going to be owning two of the large four affiliates in any local market, So ABC, CBS, Fox, and what was it, NBC. Yeah. So I think it's going to be a pretty interesting period because there's going to be a lot of synergies coming from the consolidations. Next Star is trading at, I think, six times Ibadah right now.

After their deal with Techna, they're going to look a lot better, right? I mean, on the post-Snergy basis, they're still going to trade it six times. but, you know, because they're paying a premium for Tegna, but they're much better in terms of able to compete in the marketplace, you know, with respect to scale. And the thing that I'm focused on in the broadcasting space is local scale. That's highly, highly important. Historically, you know, these broadcasters, you know,

their competitive advantage is local news and local content. And this is something that the large tech platforms cannot. replicate and it's very special and no one else has it in the media place so it's a very very unique business you know can i pause you there yeah sorry local news and local news local sports all this sort of stuff they will tell you out the wazoo this is their special sauce and while i do hear that i do wonder like my issue with the broadcasters has always been they get paid huge amounts of money because of this regulatory barrier that was put up where CBS ABC the parent can't own the local broadcaster across the country.

And they get cut in on YouTube TV, all this sort of stuff. And when I look at local everywhere else, right, whether it's the athletic, whether it's local newspapers, whatever you want, it doesn't monetize anywhere close to the rates that you see local broadcasters monetize. So my worry with them has always been, look, I get it, they trade for super treat valuations. I don't know if the spectrum has as much value as people think it did from the 10 years ago. I think it was a one-time thing. There is some, but I don't think it's that much.

But I see the valuations. I see the roll-up story. But I always worry that as the regulatory landscape changes, like, if I was ABC and I was doing Hulu or YouTube TV, and I was paying Next Star $2 a head for the local thing, at some point I'd just be like, why don't we just cut them to F out and let somebody let them go find their local news elsewhere? And if that happens, you know, I just don't see local. monetizing at anywhere close to what these guys get because of their regulatory. So I'm always worried I'm going to be the chicken that gets its head cut off when at some point somebody pulls the trigger and kicks one of these groups out. Yeah, yeah, that's, I'm less concerned about that.

I'm more concerned about that prices will continue to go up. And at some point, it's the, you know, consumers who are cutting the court. I mean, you've seen that over the last five years, but it's going to be worse and worse to the point where, you know, there's not going to be enough critical mass for local content. But are we saying the same thing? Because consumers cut the cord, right? And the only reason you subscribe to the legacy bundle right now is sports, right? It's really sports. And what I worry is sports is national. You're not subscribing to, you know, $100 a month legacy video product because you want to see the local high school team play football, right? Like, you can find that

elsewhere. You're getting, Nexstar is getting cut in on that because they have access to the ABC sports or the Fox sports. As the bundle and wines, like at some point doesn't ABC look and say, hey, how much is next door is seeking a third of our local revenue for some football games? Like, why don't we just cut them out? I think we're saying

the same risk in the long term. Yeah. I mean, so there's the dynamic where the networks and the affiliates have this kind of love-hate relationship. Yep. And you know, over the last say 20, 30 years, the networks have come out ahead of the affiliates because of their

ownership of these national sports contents. I think going forward with the consolidation of the affiliates, it's going to be the other way around because now you have four networks, right, and then you've got two of these large superstation groups. So if you look at what these two sides offer, I would say the more differentiated side is the affiliate side because they have the local news that the networks don't. And the affiliates can go and bid for national sports contents like the networks. I don't see why that can't be the case. So you think Nexstar with like CW, you think Nexstar's next move is starting to bid? I mean, they've already done a little bit. I think Nexorized tennis, if I remember correctly, or maybe that's... They have a bunch of,

they have a bunch of sports assets on their CW network. I think 40% of their programming is sports. I mean, there are niche and small sports, but you know, you're starting to see that, right? You know, it doesn't even have to be the CW. You can just bid as a loop. I don't know. I mean, so my point is that balance of power is shifting very quickly after this consolidation wave. But, hey, like, I don't want to get, you know, I don't want to be any misunderstanding. I'm not going on the broadcasters.

I'm actually, I'm doing a lot of work on it because it's interesting, and there's a lot of high yield and a lot of credit in this structure. to provide trading opportunities. But I'm not law on the structure. And I still think there's a lot of work to get from now to once they close those transactions and realize the synergies. And then you have this big problem, right? I mean, you're still competing against large tech platforms and you're still going to be uncompetitive. So, you know, there may be, it could be a short, right, after this foundation.

I mean, that's definitely the other question, right? Because we're talking, I'm talking about it in like a close. closed ecosystem of the networks, the, let's just call it the cable providers and the affiliates all pulling out each other. And it's like, look, Netflix is going to do, what, six NFL games this year? They've got the WWE now. Paramount's going to be, I think they're going to put a lot of the UFC on CBS Legacy, but Paramount's got the UFC. Like a lot of this NBA, Amazon's got the third-tier NBA packages. Like a lot of this is going online. And you wonder if you look up five years from now and you say, oh, we were worried about these guys budding and all of the sports assets

have quietly left, quietly left the entire playing field and, you know, then everything rebundles. But I just worry, to me, the affiliates, like, if you and I recreated the world today, there would be no world, there would be no place for affiliates, right? Like, they are kind of a leech on the back. And I just worry as this bundle breaks, the affiliates were fighting over a small piece of the pie that history tells me goes away. is not as valuable as what they're getting paid for? I actually think the complete, complete opposite.

Okay, sorry, I was not. No, no, no, I love to hear that. Yeah, yeah. So my point is what the affiliates are doing with respect to local news and content, that's not replicable by other folks in the media ecosystem. So that's actually unique. And I don't think they will go away.

I think it's actually the networks that don't provide differentiated programming, right? I mean, they're doing all these shows. Anybody else can do them. They can bid on sports content, but everybody else can. So that's not differentiated. I mean, the underlying differentiated asset is the local news and local content. So I do agree.

Just to go back to my earlier, I mean, I do hear what you're saying. But so Next Star is buying Tegna for $6.2 billion, right? I can't remember if that's market cap or EV. I'm just, yeah, it's EB. If I looked at Tegna, right, and you, said their differentiator is local news and local sports. I'd say, I don't disagree with you, but there is not a local news business or local spirits business on the planet that monetizes at the rate that Tegna does, right? The reason they monetize so high is because of that legacy,

hey, ABC, CBS, and they own that legacy station. And if you told me, hey, that legacy station is going away. And now we're just monetizing the local news and local sports and all that sort of stuff. I'd say, I'd say good, good luck, right? Like, I've seen this movie before, and as it breaks, I think that's very valuable stuff, but it just doesn't get paid for. I think this is why it's so interesting to do work now, because there can be, I mean, if they lose the national sports content, so be it. To me, that's not differentiated at all.

I mean, someone else can overpay for it, right? And at the end of the day, they could become a lot smaller, and they could just offer local news and local content. And that's highly, highly valuable. I mean, they could get 10, 15 times Ipeda for that differentiated content. Now, it's going to be a much smaller organization that does that, right, without the sport, the national sports. But it is, that's the more valuable piece that we got to focus on.

Now, from here to there, there doesn't be a lot of pain, right? So that's why it's interesting. I mean, I could see a scenario in three to five years. These guys all go into bankruptcy. And then when they come out, they'll be worth a lot of money because that's it. I actually do. I kind of agree with you there, but it's the bankruptcy in which we're there and a year that I work out. So that's the interesting thing.

It's timing is very important here. But there's this morsel of like value that you see in there. And you're just trying to figure out, okay, how is it coming out? It's similar to the Echo Star situation. There's value there. But how is it coming out? The timing is very, very important because it took Equestar 15 years, you know? So I don't know.

And to out myself, I've been worried about this risk with the affiliates for eight years. And to date, I mean, not that any of the stocks aside for maybe Nextstar have been screamers, but to date that fear has been, I'm not going to say unfounded because they've obviously all had a lot of troubles. Like, just look at Technine. Technist is selling to Nextar a strategic for less than they were going to sell to Apollo, a standard general Apollo, a financial three years ago, right? Like, that's a good exit for them. Go look at the stock of Gray or Sinclair.

Like, it's been really rough for them. But to date, my fears have largely been unfounded. But I want to go to, unless you have something else in the broadcaster, I want to ask you one last thing before we read. Yeah. Go ahead. You had one of, definitely my favorite post of the week. Maybe it'll probably be my favorite post of the month.

I'm not going to use the terminology, but it was the psychology of a little, people can figure it out. It was a little over the top, but I just loved it because I, sometimes on my random ramblings I talk all the time about sucking in my thumb, like value investors, it is a huge problem of ours, a stock goes down 20% and you say it is cheaper than I, it is cheaper than when I bought it, buy when there's fear in the streets, whatever you want to say, and then the stock's down 80% and you're just wrecked. And many a firm have gone bankrupt by double down, double down, double down, double down,

and the stock goes down and down and down. Fortunately, I've largely voted that, though I've definitely doubled down on stocks once or twice too many times. And it takes your results from great to average to bad. Real facts when you have one of those. Anyway, you had this great post on it talking about that. And I just love to ask you, you know, why did you publish this? What were you kind of thinking of when you published this post?

I mean, I just thought, you know, I'm writing this series on QVC. QVC is a value investor favorite. And people have lost a lot of money in that investment over the last 10 years. And it's a Malone special, right? I mean, so there's certain sort of, you know, attractiveness of this situation to the value investing crowd. So as I was writing it, there's some people who got in contact with me arguing why this equity is worth anything at all. And I find that interesting because the senior debt is trading at like 40 cents, you know, And there's a bunch of debt in between that and the equity.

So for someone to argue that the equity has value is interesting. And, you know, that sort of, and I have a lot of experience with back holding. Okay. So don't get me wrong. I'm not like, I'm a bad investor to some extent on this as well because I was, you know, I'm a value investor at heart. So I've struggled a lot, right, with the psychology of it. And it's interesting, you know, you know, you're not supposed to do it,

but sometimes you still do it. I mean, just that part interests me a lot, you know, that, you know, it's like don't touch the fire, but you still, you know, stick your hand in for some reason. So anyway, it's the, it's the gambling instinct at the end of the day. And I just wanted to put it on paper. One, I want me to, you know, look back and think about it whenever I'm trying to, you know, add to a position when it's down, right? Just remind myself, hey, you might be right, you know, 70% of the time,

but that other 30% you're going to lose all your money. And then and to also just, you know, make sure that some of the people in the QVC crowd know that. Well, I love that you call it with the QVC. So John Malone, he wrote a memoir, and I think it comes out tomorrow. But it's going to be my book club, my book club book this month. But I love that you call it because, A, I remember one of the moments I started souring on John Malone, I think it was the 2021 or 22 annual meeting, but I could be mistaken. He came out and somebody asked, what's your favorite stock in your empire? And he said QVC.

And I had been long QBC previously. I wasn't long. I like didn't do too poorly on it. But I had been long. And so I followed it closely. And I was like, what is this guy talking about? QVC is like drawing dead. Your only hope is like some type of miracle, sometimes.

type of operational miracle. And I think QVC kind of got dealt in an unlucky hand. You know, the distributor fire and all that. But QVC was clearly drawing down at the time. I was like, hey, he's just looking at free cash flow yield. And I remember a few years later, he was like, Discovery is a cash flow machine. I was like, man, discovery. This was before the Warner Brothers merger.

And even after they have no sports, they have no premium. Like, they are in a really tough position. And it made me wonder, you know, John Malone for all his legend, for all his, was he a product of the time he grew up? right? He starts putting cable systems together in the late 70s, early 80s, you know, interest rates come from 18 to 4. Guess what? Any long-lived assets going to do great under that, particularly when you're running it with a levered financial engineering style like Malone runs. And, you know, it really or, hey, the dude's 75. Guess what? Everyone starts to lose their basketball at some point, except for maybe Warren Buffett, apparently. But maybe he just kind of lost his basketball. But it really made me question a lot of it. And But QVC, the preferreds might be interesting. I know there's hold co-arguments and all this sort of stuff. But if you're here saying, hey, I'm long to equity and look at the free cashier, I'd be like, man, I'd love for you to be on the other side of all of my trains.

Yeah, yeah, yeah. I mean, I think my view is that, you know, we come in cycles. And I think Malone is, I mean, he had a fantastic track record. but this whole internet and especially mobile has just been such a big wave over the last 10 to 15 years it carried out a lot of people

all the stuff in old media if you look at the stress I mean I don't know 50% of it is media old media and telecom right I mean SaaS unfortunately is one of those so all these old guys in media who's you know larger than life maybe 15 20 years ago

have been carried out by the internet company's platforms. So it's just a wave. And now we have AI coming. So who knows who else is going to get carried out. So you have to think about that. But it's interesting. I think it's more of the time than anybody being so smart or anybody being so dumb is just luck.

It's one of the tough things. You can point to a lot of people and say, hey, this guy got lucky, right? He yoloed Bitcoin and just bought it the whole way. And maybe there was some genius there, but a lot of it's probably locked like one trade. But you know, you look at Malone from 80s to 2010, the man can do no wrong. And it's not just cable, right? Because he goes to the, he also puts together the cable nets and everything.

But then from 2010 on, the man can basically do no right, to be honest. I mean, Formula One's a killer. But I hate to say 2010 because that misses the serious XM bankruptcy grand slam, which, you know, You can't take that away. But go to 2013 Liberty Global, Lilac, all the discovery mergers. And you kind of look and you wonder, was this hand of it? Like, what happened? But probably a conversation for another.

All these, you know, all these. Every one of his companies was old media and they weren't able to kind of get over the hump, right? With this, you know, internet platforming everything. So it's, I mean, you know, he was an investor in one theme. And that theme, unfortunately. Yeah, but that's when you wonder, was the man a genius? Or was he a one theme lucky? Like, it was all one cyclical bet.

But we might have to, the next time you come on, forget Sats. You and I will talk about, I just love the post so much. I sent it to so many people. I was like, this is what I talk about when I talk about, maybe not quite as explicitly. But this is what I'm talking about when I'm talking about sucking my thumb, value traps. You just put it so perfectly.

And the contempt that you felt for backholding is the contempt that I feel for myself when I back hold so it really that was that was first of all that was written mainly for me to me okay yeah yeah yeah I was yes yes the QVC guys of anything in fact I wish they made a lot of money I wish everybody makes a lot of money it's more me me they they inspired me to write that for me not not for I look I'll I'll have somebody all the time email me be like I've written this from a hundred to 15 but now's the time X Y Z reason I'm like dude this is the reasons you were longer at 100 and maybe, but I'm seeing a lot of the mistakes that I have made in the past and what you're saying.

So, yeah, anyway, I just love the post. I thought it was great. Wait, Yomi Century Stocks, again, the best sub-sack of the year, you should go to subscribe right now. We'll talk about one other thing once I press record, but thanks so much for coming on for the second time and looking forward to the third time. Thank you very much. Enjoying it.

A quick disclaimer, nothing on this podcast should be considered an investment advice. Guests or the hosts may have positions in any of the stocks mentioned during this podcast. please do your own work and consult a financial advisor. Thanks.