Dish Network Offer to Clearwire Threatens to Stall Sprint Buyout Plans

NEWS ANALYSIS: Dish Network offers a premium purchase price for the part of Clearwire not already owned by Sprint in a last-minute effort to disrupt the carrier’s purchase of wireless spectrum it must have to stay competitive with AT&T and Verizon.

In other words, Sprint is telling the world that Dish’s plans are not going to happen. This meshes closely with Clearwire’s statement. Still, Clearwire did appoint a Special Committee to discuss the offer with Dish. “We look forward to working with Clearwire’s Special Committee as it evaluates our proposal,” said Tom Cullen, Dish executive vice president of Corporate Development, in a prepared statement.

There are, of course, a lot more questions than answers, but the primary question is what’s in this for Dish? The likely answer is at least a form of corporate extortion and, at best, access to the Clearwire network for its own communications network.

Assuming Dish manages to buy a quarter of the available non-Sprint stock and in the process force Sprint to give it board representation, Dish can make a huge nuisance of itself. In the process, it could, at least in theory, keep Sprint from buying all of Clearwire. By thwarting Sprint’s plans, at least for a while, Dish can agree to sell its stock at a premium, and also tack on some conditions.

For example, Dish could demand that it have access to the Clearwire network and to the company’s towers as a way to further its own wireless ambitions. Or Dish could simply demand to be bought off so it will go away. This is the corporate extortion I mentioned earlier.

But in reality, it’s hard to see how Dish is in a position to demand very much and Sprint really doesn’t have to pay a lot of attention to Dish in that regard. However, Dish could also buy up a bunch of Clearwire stock and then join in a rumored stockholder lawsuit that apparently claims that Clearwire should have asked for a higher price for its sale to Sprint.

But all of this looks more like an effort by Dish to cause trouble for Sprint than anything else. At this point in the Clearwire acquisition the only hurdle remaining before the deal closes is approval by the Federal Communications Commission’s International Bureau, which has to approve foreign ownership of U.S. carriers. This seems to be moving through the FCC without any hitches. The only other regulatory hurdle was approval by the U.S. Department of Justice, which the deal has already received.

So what can Dish plausibly end up with? Clearly the company thinks it can get a payout from Sprint of some kind. But is it really worth it to spend all of the money Dish has to spend to achieve anything? That’s a question Dish stockholders should be asking of its own directors.