Insurance Pays Off for EchoStar3/09/2005 3:23 AM Eastern
EchoStar Communications Corp. said it has settled claims with several insurance companies regarding a malfunctioning satellite that will bring the No. 2 direct-broadcast satellite service provider a cool $240 million.
EchoStar made the claims for its “EchoStar IV” satellite back in 1998 after the bird developed anomalies regarding the deployment of its solar panels. While the company had made claims with several insurers amounting to $219 million, the insurers disputed those claims in arbitration.
In a securities filing Wednesday, EchoStar said it had reached a settlement -- including accrued interest -- for $240 million. According to the agreement, the insurers must pay EchoStar by April 26. The company said it has already received signed agreements from insurance carriers representing 83% of the total amount of the settlement.
“While we believe the remaining insurers will each sign the agreement shortly, the arbitration will continue with respect to any insurers who decline to settle,” EchoStar said in the filing.
That check will more than pay for EchoStar’s purchase of “Rainbow I,” the satellite the DBS giant agreed to purchase from Cablevision Systems Corp. for $200 million last month. EchoStar is in negotiations with Cablevision chairman Charles Dolan regarding the fledgling Voom HD DBS service, although details of those talks have not been released.
Most analysts believe Dolan -- who received a reprieve from Cablevision Tuesday to keep Voom going while he seeks financing -- could either buy the Rainbow I satellite from EchoStar or, more likely, lease transponder space on the bird for his Voom service.