Dish Plays National Security Card to Try to Trump Sprint-SoftBank Deal

NEWS ANALYSIS: Dish Network newspaper and Internet ads raise questions about security in an attempt to scuttle a Sprint–SoftBank merger even as the companies agree to government restrictions.

The imagery couldn't be more blatant in the full-page ad that Dish Networks is running in The Washington Post. In the ad, a picture of container cranes at a seaport is positioned above the image of an Ethernet router, with the port marked "Internet" pointedly left empty.

The ad says that the security of the United States should never be left in the hands of a foreign company and equates the failed bid by a company in Kuwait to buy U.S. port operations companies to the Sprint–SoftBank merger.

While full-page public policy ads are nothing new in newspapers in Washington, the intensity of the last-ditch effort by Dish to block a U.S. telecommunications merger is something different.

In addition to the ads, Dish has been waging a public relations war against SoftBank issuing statements raising alarm at a recently reported agreement by Sprint and SoftBank to allow U.S. government approval of one of the surviving corporation's board members. Dish also downplayed foreign ownership of T-Mobile, which is owned by Deutsche Telekom and Verizon Wireless, which is almost half owned by Vodafone.

But the Dish press releases and ads ignore the history of the transaction, the historic postwar relationship between Japan and the U.S., as well as the law concerning foreign ownership. One source at Sprint pointed out that because Japan is a strategic U.S. ally and a signatory of the World Trade Organization (WTO) as is the U.S., that foreign investment in U.S. companies is presumed to be in the best interests of the U.S.

Currently the SoftBank merger with Sprint is nearly done with the regulatory review process. Once that's complete, the Federal Communications Commission will consider the merger. There, approval is widely expected. While the FCC's public interest review process will take a while, SoftBank's merger with Sprint could be complete by the end of the year.

Meanwhile, Sprint's Special Committee continues to consider the Dish offer to buy all of Sprint, versus the current merger by SoftBank to buy 70 percent. In that transaction, Sprint has begun its due diligence review of the Dish merger bid. If the Special Committee that's considering the Dish merger offer comes back with a favorable report, then Sprint can call off the SoftBank merger and go with Dish after paying SoftBank a breakup fee.

But that's not all. Sprint has a merger of its own wending its way through the approval process, which is the plan to buy the slightly less-than-half of Clearwire that it doesn't already own. On May 28, the Clearwire board sent a letter to stockholders stating that in light of Sprint's increased offer of $3.40 a share for the company's stock, the board recommended that shareholders vote to approve that proposal.

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...