Dish Network announces $25.5 billion bid for Sprint Nextel

April 15, 2013

Dish Network announced a $25.5 billion bid for Sprint Nextel on Monday, challenging an offer by Japan’s SoftBank for the nation’s third-largest wireless carrier.

The satellite-television provider is setting up a high-stakes tussle for a money-losing wireless provider that could reshape the telecom industry. If approved, Dish and Sprint would combine two underdogs into a single provider of television, high-speed Internet and cellphone services.

The bid is the latest to shake up the telecom industry as cable, satellite and wireless service providers scramble to meet a relentless demand by consumers to watch video, surf the Internet and communicate on any device at any time and anywhere.

Consumers have two necessities in life: “food and shelter,” Dish Chairman Charlie Ergen said in a conference call. “But after that, you probably get to your mobile device and your TV as three and four. . . . You want to be able to be connected no matter where you are, and you want to be able to watch your television no matter where you are.”

Sprint confirmed it received the unsolicited bid. It said its board of directors will “evaluate this proposal carefully and consistent with its fiduciary and legal duties. The company does not plan to comment further until the appropriate time.”

Sprint’s stock jumped more than 13 percent Monday, while Dish fell 2 percent.

SoftBank, which submitted its bid for Sprint in October, did not immediately respond to a request for comment.

Any deal would have to be approved by the Federal Communications Commission and antitrust regulators. SoftBank’s offer has the additional regulatory hurdle of a foreign ownership review.

Analysts said the Dish proposal would probably be viewed favorably by regulators who want to see more competition for Verizon Wireless and AT&T, two firms with more than 60 percent of all U.S. wireless contracts.

“My first take is that the Dish offer is stronger than SoftBank’s both strategically and financially, and will force SoftBank to strengthen its offer if it wants to win Sprint,” said Informa analyst Mike Roberts.

Dish offered $17.3 billion in cash and $8.2 billion in stock for Sprint, while SoftBank had offered $20.1 billion for about 70 percent of the company.

Dish, based in Englewood, Colo., is the nation’s third-largest video subscription service, with 14 million customers. The merger would immediately give Dish access to Sprint’s 55 million customers, and the company said it would begin to market satellite services to those users. But most attractive is Sprint’s airwaves, a powerful swath of spectrum with a national footprint.

Dish’s foray into wireless marks the latest gamble for a maverick firm known for its big bets and secretive profile.

The satellite firm, launched in 1980 with Ergen selling satellite dishes out of the back of his truck, is known as an aggressive underdog in the high-risk communications industry. A former professional blackjack player, Ergen has made major wagers on nascent technologies that have challenged incumbent phone and cable businesses.

Dish has leveraged a big cash reserve to make several big deals recently — not all of which have been successful. In 2011, Ergen purchased the assets of bankrupt rental video company Blockbuster, which has largely been seen as a disappointing investment. He’s also struggled to get regulatory approval to use satellite airwaves for a wireless network similar to that being proposed by troubled LightSquared.

Investments in video player Slingbox and commercial-skipping technology Hopper have moved Dish into Internet-based video services and have been seen more positively.

But analysts continue to question whether satellite-based Internet can compete over the long term with the higher speeds being offered by cable and land-line fiber service operators.

Ergen compared the company’s business strategies over the past few years to a “Seinfeld” episode, where the first 28 minutes have lots of moving parts that don’t necessarily make sense, but it all comes together in the last couple of minutes.

The bid for Sprint, Ergen said, ties all the pieces together.

In the offer letter, Ergen told Sprint Chairman James Hance that the deal “provides more cash and affords your shareholders the opportunity to participate more meaningfully in a combined DISH/Sprint.”

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Cecilia Kang is a staff writer covering the business of media and entertainment.
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