VIA SATELLITE: How do you view the challenge at EchoStar and does your role differ from others you have had in the industry?
OLMSTEAD: The challenge is similar. Charlie has given me the challenge to create a viable business: "Here is a set of satellites and tools, now go and make that into a viable business." In some ways, that challenge was the same with SES when I started there. We were a DTH operator in Europe, and the question was where could we go from there. My job was to create a viable global business for SES, ultimately leading to the Americom merger. At Loral, it was somewhat similar. We had the residuals of the Skynet fleet after the U.S. piece had been sold to Intelsat and Loral came out of bankruptcy. The question was what do you with those assets and how do you create a viable business. We found the answer in the Telesat merger.
Now Charlie has separated the satellites out of Dish into this exciting new EchoStar Satellite Services company, and we have to develop it into a viable business. We want to grow beyond our services to Dish. How do we do that? I have just mentioned one initiative, but we have another half a dozen in our kitbag here we are working on.
Those are the similarities. In terms of differences, I would say it is really about having the opportunity to work for Charlie. He is an incredible visionary. He has a tremendous passion for this business. He is very involved in it. Clearly, he does not have to work. He works because he loves to work. It is a real pleasure working more closely with him. I have worked with him in terms of Americom and Loral, but this is the first time I have worked this closely with him, and it is tremendous.
VIA SATELLITE: What are some of your other ideas?
OLMSTEAD: That is a little bit tricky. The FSS Sidecar is the one I can talk about today. We still have to keep a lid on some of the other ideas. The cycle time for closing deals in this business is relatively long, but we are now reaching that point in terms of some of those ideas. Over the next three-to-six months, you will see quite a number of deals being announced as some of those come to fruition. I think 2009 is going to be a very good year for us.
VIA SATELLITE: How important an element is this side of the business compared to other parts of EchoStar’s business?
OLMSTEAD: The residential DTH business has its own economics and dynamics. In that market, Dish Network competes with DirecTV as well as the cable providers and now the telcos. I believe Charlie’s ambitions in terms of separating out some of these activities into EchoStar was to focus energies on high growth markets where he could take more risks. The two main activities in EchoStar are the technology business and the satellite business. We also have an international side.
The technology/box piece provides the largest portion of the revenues, but for now, it is effectively a production business with typical manufacturing margins. Their biggest customer is Dish, and they have a similar mandate to me: Grow the non-Dish business. The satellite business today is a pretty small revenue contributor but consistent with the typical financial characteristics in the satellite business, we will tend to be a very high EBITDA (earnings before interest, taxes, depreciation and amortization) producer. We will be smaller in revenues but relatively large on the EBITDA side. We both hope to be rapidly growing businesses.
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