Elon Musk and the end of a telecom tycoon’s dream

0:00In 1898, John Nuveen had a vision to underwrite municipal bonds that would propel American infrastructure into the 20th century. More than 125 years later, that vision lives on. Today, Nuveen has grown into a leading global asset manager with expertise spanning public and private markets, still investing with a future in mind. Nuveen. Invest like the future is watching. Visit nuveen.com slash future to learn more. Investing involves risk. Principal loss is possible. In September, one of the richest people in America took a trip to Paris for a conference. I would like to ask Charlie Ergen, our founder and patriarch, to join me for Q &A.

0:44Charlie, if you don't mind joining us. Thank you. That person I'm talking about is Charlie Ergen, who's being introduced here. After that applause, he starts taking questions about the future of the company he founded, his satellite operator, EchoStar. I guess I would say it's about the fourth pivot for me personally as a company. And every time we pivoted, it was always a little scary at first. And it was always sometimes nuts that we weren't... This pivot Ergen's talking about here, it has to do with some eye-popping deals that his company's been involved in. Got some big breaking news this morning from AT &T.

1:24the company paying about$23 billion in cash for spectrum licenses from EchoStar. Elon Musk's SpaceX said on Monday it will buy wireless spectrum licenses from EchoStar for its Starlink satellite network for about$17 billion. EchoStar shares jumping after Bloomberg reported the satellite TV company engaged in talks to sell some of its wireless spectrum to Verizon. These deals have sent shares of Ergen's EchoStar soaring. But when he talks about what's happening with his business on stage.

1:58So this pivot is the same thing for us. Not personally exactly where we wanted to go, but we're also then excited about how do we see if we're good enough to pivot to something that we never had before, which is having a lot of cash.

2:13Sujeet Indap: So he's at this Paris conference and his personal wealth has gone up by roughly$10 billion in the previous month. But his mood is not exactly jubilant. He's not turning cartwheels. He's wistful, for lack of a better word. One person who's close to him even described his feelings as, quote, bittersweet, that in fact this was not the ending he had written for himself. That's Sujit Indap, the FT's Wall Street editor. Ergen's big dream, which he'd been chasing for years, was to create America's next massive mobile network, something that was going to take on the heavyweights of Verizon and AT &T. He spent tens of billions of dollars over years doing so.

2:58Sujeet Indap: But then very suddenly it became clear that that dream was not going to work out the way he had planned. And that's how we've ended up where we are today. Well, so what happened? And what was behind Charlie Ergen and Echo Star's ultimate fate here? Yeah, it comes down to one man, Elon Musk, the richest man in the world.

3:23I'm Michaela Tendera from the Financial Times. Today on Behind the Money, we're looking at why the founder of a satellite business had to abandon his most audacious plan yet. and what Elon Musk and U.S. President Donald Trump had to do with it.

3:55For a now billionaire, Sujit tells me that Charlie Ergen's career got off to a pretty unassuming start.

4:02Sujeet Indap: So he did a normal, boring corporate job after college. He was at Frito-Lay, the potato chip maker in the accounting department. But when that got too dull, he ended up just on a whim becoming a professional gambler, playing blackjack and poker for a living. Poker, blackjack. These games stick with Ergen when he goes back to the business world. So poker would have an influence on his business career. From that stint as a professional gambler, he learned that business can be analytically applied, probabilities are important, and you can't be emotional when you've got certain cards that have been dealt to you.

4:45In the early 1980s, he decides to place a big bet on a burgeoning technology, satellites.

4:52Sujeet Indap: There's this new technology called satellites. And so he launches a company called EchoStar with a single satellite in 1980 alongside his wife and a partner. And then from that comes the idea that you can actually get pay TV, a form of cable TV, except through satellites. And so Ergen launches a satellite TV business, which becomes what's known as Dish Network. But as Ergen builds his business, Sujit tells me that his negotiation tactics earn some enemies. In the pay TV business, in some ways it's glamorous, right? Because you're negotiating with Disney and Time Warner and Paramount. You're carrying their channels on your network and you're kind of a Hollywood or New York player.

5:36Sujeet Indap: But in fact, Ergen lives in Colorado and his whole business, satellite TV, is a relatively cheap option. And so he was not a guy willing to pay top dollar to carry ESPN or CNN or Fox News. And so that led to these brinksmanship negotiations on how much he was going to pay the big studios and networks to carry their content. And he was happy to just, you know, say, no, I'm not paying that. And if you're a customer, you could just cancel and go somewhere else. And he was happy to do that. But he wasn't going to make a deal he didn't want to do. He certainly didn't care about being liked. That's the FT's Jill Shaw.

6:16She's been reporting on this story with Sujit. He's kind of willing to go all the way to the cliff's edge. He is willing to wait and sort of call people's bluff. So he's been known for this kind of like scorched earth tactics all his career. Through the 1990s and into the 2000s, Dish and Ergen become a massive success.

6:43Sujeet Indap: Well, he becomes a billionaire. For people who couldn't get cable TV, Satellite was the only way to get it. And there was basically a duopoly. There's Dish, which is Charlie Ergen, and then the other big player, DirecTV. With Dish, I get more and I pay less. So why pay more? Switch to Dish. Now, for a limited time, call and ask to take the Dish Challenge. And if we don't save you more than$250, we'll give you$250. Guaranteed. And those companies at their peak had 20, 30 million subscribers paying$50,$60,$100 a month to get channels. So that was a great business, a huge cash cow. And Ergen becomes one of the biggest media tycoons of the era.

7:22Sujeet Indap: And he is a part of a generation of people who saw telecom and media converging and changing, whether it's like Ted Turner, who created CNN, or John Malone, the so-called cable cowboy, who also lives in Colorado. They saw like where the world was going, where technology was going. And they built these really complicated, expensive businesses, which required a lot of cash flow and borrowing and bet big on it. And Charlie is very much in that vanguard. Dish reaches those peak figures Sujit mentioned in the early to mid-2010s. And while that business is cruising along, Ergen sets his sights on something potentially even bigger.

8:05That's building his very own mobile phone network. Something to compete with the likes of major U.S. firms like Verizon, AT &T, and T-Mobile. In order to do that, he needs something called wireless spectrum. own. Now, stick with me here. Sujit says to think of it like this.

8:25Sujeet Indap: Essentially, it's invisible waves in the air, and it's the way your mobile phone signal is being transmitted. And so there's a finite amount, typically belongs to the government, and the government for decades has been selling it or leasing it to private companies in the effort to have them develop the actual mobile phone networks. So AT &T and Verizon and T-Mobile and others just buy the spectrum and then they build a business of managing cell phones. There's a finite amount. What do you mean by that? Well, someone has ownership or control of it and it is the property essentially of a particular company.

9:03Sujeet Indap: So if you have it, that means you have the right to use it to create a network and I, rival of you, can't so much use it. So those rights are precious and they're valuable. and there is a competitive process to acquiring them. So Ergen makes it his goal to acquire as much of this spectrum as he can. And he starts spending big bucks to do it. But at this point, it's the late 2000s and there are already some huge, very established networks like AT &T and Verizon. I mean, this sounds like a huge endeavor. How risky is it, Jill Sujit? Well, he's spending tens of billions of dollars. up front and he's going to spend years, if not decades, like building this network.

9:50Sujeet Indap: And that's all uncertain that you'll actually have like customers in the end who are going to choose your service over AT &T and Verizon and whoever else. Yeah, most people have one wireless network provider on their phone. You know, if you're wanting to get customers, you're taking them away from incumbents who have a network built, who have like the signal strength. I mean, if you're like wireless providers providing you the service you need, why are you going to switch, especially to a name maybe you haven't heard of as much as you've heard of Verizon and AT &T? So how close does Ergen get to achieving this goal of becoming the next major national cell phone network in the U.S.?

10:28Sujeet Indap: Not very far. So he accumulates all this spectrum and everyone in the industry is just kind of waiting for the next shoe to drop and for him to like create a brand and build this actual network. Ergen also makes some attempts to acquire a network. In 2013, he bids for the carrier Sprint, but doesn't get it. And in 2019, he ends up acquiring a carrier called Boost Mobile. But it's significantly smaller than the other national players that we've been talking about. By three or four years later, he had fewer than 10 million customers. Compare that to like Verizon and AT &T who have 150 million. So a lot of spectrum, not many customers, and a lot of questions on what exactly he was doing.

11:13And one of the most notable voices asking those questions was actually Elon Musk.

11:19Sujeet Indap: One of the big pieces of the sprawling Musk empire is something called SpaceX. and it's known obviously for launching rockets. And also it has a satellite service known as Starlink. Starlink is like a communications and mobile phone service satellite-based, but the spectrum is valuable because you can create a totally seamless experience if you have both. You know, technology is complicated, but essentially that spectrum Ergen had, a portion of it was absolutely essential to building out Starlink to the ambitions they had planned. Remember, that wireless spectrum is finite. Anything Charlie Ergen has, Starlink doesn't.

12:03Now, jumping ahead a bit, by early 2024, Ergen's satellite TV business is struggling. Cord cutters, or dish ditchers, we can call them, were jumping ship to streaming services and hurting Dish Network and companies like them.

12:18Sujeet Indap: The cash cow that he had, which was the Dish Network, that was a melting ice cube, meaning there was a lot of cash flow, but it was shrinking a little bit every year. He had a bunch of debt for all the spectrum he bought, and that all came to a head at the beginning of 2024. To deal with this, Ergen negotiates intensely with his creditors. And as Jill mentioned, he's willing to go all the way to the cliff's edge, you know, call people's bluff. And in this case, you know, he really pissed off his creditors and then kind of waited for months before negotiating and was quite a tough negotiator. Eventually, he works out a deal with them that saves his business from bankruptcy in September of last year.

13:02But as it turns out, this is just one of many major hurdles that Ergen has to overcome in the next 12 months.

13:14The future of fixed income investing will continue to blur the lines between public and private markets. Nuveen's credit platform was built to navigate this shifting landscape, channeling capital toward the businesses, infrastructure and energy solutions that are shaping tomorrow's economy, all while aiming to deliver the resilience and returns that portfolios seek today. Nuveen. Invest like the future is watching. Visit nuveen.com slash future to learn more. Investing involves risk. Principal loss is possible. So Charlie Ergens narrowly avoided bankruptcy after some critical negotiating. But he's still got a lot of spectrum.

13:54And Elon Musk isn't the only one who's paying attention to that.

13:57Sujeet Indap: When you buy the spectrum, there are milestones you agree to with the federal government, the regulator, the FCC, the Federal Communications Commission. And many of those milestones were met. He's not making the kind of progress that the FCC would like to see. This is valuable spectrum that they've given him a license on. He keeps pushing back milestones. And the network build-out just isn't going at the pace that they expected. In April of this year, Musk's company, SpaceX, takes things a step further. They had been complaining to the regulator, the FCC, that Ergen was frankly squatting. He was taking this spectrum he had bought and not doing anything with it.

14:38Sujeet Indap: And oh, by the way, if you gave that spectrum to us, government, we would commercialize and expand Starlink very quickly. So maybe you should poke Ergen and maybe even force him to sell it to us or take it from him. Anyway, they were agitating in many ways. In a letter to the FCC dated April 14th, SpaceX claims that Ergen's DISH network, quote, barely uses the spectrum after years of, quote, false promises and dubious technical showings. End quote. Two days later, Ergen pushes back on that in a rebuttal letter, saying that SpaceX was, quote, distorting the truth while missing the point, end quote.

15:20And then the FCC and its chair, Brendan Carr, get involved just a few weeks later.

15:25Sujeet Indap: There's a sense that Trump and Carr are aligned with Elon Musk. And in May of this year, basically out of nowhere, Carr and the FCC send a letter to Charlie Ergen and Echo Star saying, what are you guys doing? You have all the spectrum and you have basically no mobile phone network, just a few million subscribers. Please explain what you're doing, what you're planning to do. And by the way, there's, you know, it's intimated there's some kind of threat that your spectrum rights could be forfeited. I mean, how big of a deal are these letters for Ergen? It's not great for him. Well, he spent$40 billion roughly buying the spectrum.

16:03Sujeet Indap: In the worst possible scenario, the government could just take all of that spectrum back or some large portion of it for free. So he wouldn't have the spectrum, he wouldn't have any money, and he would have still more than$20 billion of debt. So it's an extinction event for him. So it's as bad as you can imagine. So, Suji, what is Ergen's plan? He quickly realizes that he's going to have to go to the top of the food chain, which means Trump himself. So in the summer, he ends up getting a meeting with Trump and Charlie Ergen gets the chance to plead his case in person. Now, there's still a chance that this meeting doesn't go Ergen's way.

16:46That would mean, as Sujit said, that the government seizes the spectrum. But Ergen has a backup plan. he prepares an emergency bankruptcy petition.

16:57Sujeet Indap: The idea there is in bankruptcy court, that would immediately halt any efforts by the government to seize the spectrum a judge would be put in charge. And there would be some kind of order or process around what to do with the company and its spectrum and would prevent Trump from literally taking that spectrum out of Ergen's back pocket. So with that card in hand, Sujit learns from a source that Ergen goes into a meeting with Trump. So our understanding of that meeting is that Ergen told Trump a few things. One, his company, Echo Star and Dish, these were family businesses, started with his wife, his children were involved with it still.

17:36Sujeet Indap: And in fact, you know, he and Trump had a lot in common, who also was a businessman who had a family oriented business as well. And what he really wanted was the permission and the space to solve this issue about what to do with this spectrum, like on his own. So they told essentially Trump, let me handle this. You'll get a solution you like, but I just need a little bit of time and space to do that. And Trump was charmed enough to give him that space. With that extra time, Ergen finds a solution. In August, all of a sudden, there's an announcement that Ergen is going to sell off some of his precious spectrum to AT &T.

18:17He's also going to sell some of it to SpaceX and Elon Musk. In total, these deals are worth$40 billion.

18:26Sujeet Indap: Obviously, the dollar value was huge. It was a huge valuation of the spectrum. So it was worth way more than the company had kind of internally valued the spectrum and what Wall Street valued it at. So that's just like a great win. But also, it was the moment everyone realized that Ergen was throwing in the towel on his lifelong dream of building this mobile phone network. And everyone thought, whoa, the thing we thought never would happen is going to happen.

18:59With each deal announcement, first AT &T paying$23 billion, then SpaceX paying$17 billion. Echostar shares jump dramatically. Investors are excited about who he might sell to next. But there's something also really interesting about Echostar's deal with SpaceX.

19:20Sujeet Indap: SpaceX, we're going to pay$17 billion in total, half of that in cash. And then the other half was going to be in stock of SpaceX, which is a private company. It's valued at more than$400 billion. And suddenly, EchoStar became a very interesting company because not only did it have all this cash from the spectrum sales, it was going to be this vessel or vehicle for publicly traded SpaceX stocks, which, again, is not available to ordinary investors because it's private. And so it was a totally unique security that had been created in this shocking transaction. Yeah. So now if like a retail investor is interested in holding SpaceX stock, this is kind of the next best thing.

20:05Sujeet Indap: Yeah. It's really basically the only way to own SpaceX stock if you're an ordinary investor. And that's pretty exciting potentially. This is great news for EchoStar shareholders. I mean, the stock rockets, and it gives those shareholders access to SpaceX shares because that's what he gets in return for the sale of the spectrum. What did this symbolize to you? You know, the idea that Musk's business, SpaceX, had been calling out Ergon for not using a spectrum to its full potential. And now SpaceX is almost like a part of Echo Star, you know, from an investing perspective. I mean, Musk in a lot of ways represents what Charlie Ergen was at one point in his career.

20:52Very disruptive, quite a tough negotiator. And it seems like Musk kind of beat Charlie at his own game. You know, Musk played the long game with a spectrum. He'd been eyeing it since 2019. And he finally got it. And, you know, in 2025, the kinds of companies that Musk is involved in, they're kind of like what Ergen was doing with satellite TV back in the day. So this is the new entrepreneur. So after the AT &T and SpaceX deals had been announced, Ergen made that appearance at the conference in Paris. It was an industry event for people working in the satellite business.

21:35Sujeet Indap: This whole session was extraordinary in Paris. This is a big conference. EchoStar had been on the calendar for this for a long time, well before these transactions. And so this ended up being the place where he would first speak about these deals and this huge change in strategy, this pivot. And he admitted several times, and his deputy did the same thing, that if given the chance, they would have created more shareholder value, they thought, if they were able to continue and build their mobile network. And so they pivoted and decided to do these sale transactions of Spectrum, generate a lot of money.

22:08Sujeet Indap: And obviously the stock has done really well, but it's not what he ultimately wanted to do. And he was very plain about that, which was a pretty extraordinary admission. I was well trained long before I started business because when you played blackjack, you played the odds. And every hand, there was a right and wrong answer. that wasn't so dissimilar here, where the hand that we were dealt by the FCC was one that there's only one logical path that we were going to be able to take. Suji, Jill, what does what happened here with Ergen tell you about business strategy and decision-making? What do you take away from this?

22:49Sujeet Indap: So to me, Charlie is the guy who always wanted to be in control, and he's very stubborn. and that had served him well. He was willing to be patient, play a long game. He negotiated very harshly, whether it was creditors or big media companies when he was running Dish. But at some point, he just ran out of runway and that must have been very personally painful for him. But he recognized that clearly when it happened and he was able to very quickly adapt even if he didn't want to and that proved ultimately to be profitable. And it shows to me that even for like the most important influential people in the world, even they have moments when they're not in control and how they respond to that, you know, I think is very interesting.

23:35I mean, I'll just echo that. Ergen had a lot of time. You know, he bought the Spectrum when he did. He had years to build out the wireless network of his dreams. It was harder than he probably thought it would be. And he wasn't able to make the same magic that he was able to with his earlier business. and if there are players out there that are faster than you that have advantages that you don't have and your back is against the wall, this is what happens.

24:07Behind the Money is hosted by me, Michela Tendera. This episode was produced by me and Safiya Ethmed. Fact-checking by Simon Greaves. Sound design and mixing by Sam Giovinco. Original music is by Hannes Brown. Tover Forges is the FT's acting co-head of audio. Thanks for listening. See you next week.

24:51solutions that are shaping tomorrow's economy, all while aiming to deliver the resilience and returns that portfolios seek today. Nuveen. Invest like the future is watching. Visit nuveen.com slash future to learn more. Investing involves risk. Principal loss is possible.