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    Dish, Sprint Merger Could Do for Video What’s Never Been Done Before

    By
    Michelle Maisto
    -
    April 19, 2013
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      Dish Network executives made a compelling argument, during an April 15 conference call, a transcript for which was filed with the Securities and Exchange Commission April 18, for why Sprint should walk away from its nearly complete $20.1 billion deal with Japanese wireless carrier Softbank and instead accept the $25.5 billion merger that Dish, the nation’s third-largest cable TV provider, proposed April 15.

      The deal is sweetened (or complicated) by the fact that Sprint, which owns roughly half of 4G WiMax provider Clearwire, is currently in the process of trying to buy the half it doesn’t own. That process was slowed down in January when Dish Network, again, jumped in with a late bid. Dish offered a higher price but more complicated terms, and while the deal seems likely to work out in Sprint’s favor, Dish’s offer, awkwardly, is still being considered.

      During the call, Dish Chairman Charlie Ergen said that Dish is consulting with Sprint and Clearwire on how they want to proceed, and that its offer to Sprint isn’t contingent upon Sprint’s deal with Clearwire going through.

      If Dish’s actions seem erratic, Dish executives have previously said to trust that there’s a “Seinfeld strategy” at play.

      “The building blocks that we’ve been putting in place over the years are like a Seinfeld show in the sense that in the first 28 minutes you see a lot different things that don’t make sense in that show, and in the last two minutes they all kind of come together,” Ergen said, again explaining the strategy.

      “This is the culmination of a lot of years of work, where we’ve been putting a lot of things in place, whether it would be the purchase of spectrum, entering auctions, the acquisition of Sling Media, all those things come together now with the merger with Sprint, to put it into a total and make it a very unique, powerful company,” Ergen continued.

      Those accumulated puzzle pieces are a big part of Dish’s answer to why Sprint should choose it over Softbank.

      While Softbank has money and 4G expertise, a combined Dish-Sprint would be more than a traditional carrier but able to offer broadband, programming and wireless phone services.

      Dish would be bringing 45MHz of unencumbered spectrum “to the party,” said Egan, along with 14 million subscribers, $24 billion of “new opportunity synergies” and its $25 billion offer, which includes more cash than the Softbank offer.

      Dish, Sprint Merger Could Do Something Brand New to Video

      But, of course, it’s the party itself—the completion of the Seinfeld episode—that Dish is after, and how it sees it ending is with consumers able to enjoy streaming video and first-class wireless service in their homes, as well as anywhere else they go, thanks to a wireless broadband superhighway created by the combination of Dish, Sprint and Clearwire spectrum.

      Ergen explained: “AT&T and Verizon have two four-lane highways, but they are very congested. Sprint has a two-lane highway today that’s very congested. But when you add … the Clearwire spectrum, you end up with an eight-lane highway that’s … very lightly congested. That’s going to be a tremendous strategic advantage in the marketplace going forward, if you believe that data usage is going to continue to grow.”

      (Ergen, earlier in the call, said that Cisco has reported data use is growing at a compound annual rate of 50 to 60 percent, but that some people think 80 to 90 percent is more likely.)

      Ergen continued: “This is a continual theme, what we’re going to make. … You want to be in your home with video, broadband and data, and voice, and you want to be outside your home with those same things. And while the cable industry does a really good job in your home, and the current wireless industry does a really good job outside your home, there’s really no one company on a national scale that puts it all together. The new Dish-Sprint will do that.”

      A Dish-Sprint would also be able to extend broadband services to underserved areas of the country and improve spectrum efficiency. Dish already has technicians on rooftops in every county in the United States.

      “We envision using a rooftop antenna, which not only increases the throughput based on the [bandwidth] gain, but also increases the size of the cell radius, thereby getting more capital efficiency out of the tower build and being able to provide service to more customers,” said Ergen.

      As for Softbank, Ergen isn’t worried about it. If Sprint backs out, Softbank will get a $600 million breakup fee that Ergen said Dish is “more than willing to pay.”

      However, should the Seinfeld episode end with Softbank getting Sprint, Ergen suggested there are always other options to pursue.

      “We’ll just end up with a two-part episode; they had a few of those. … It will be an hour-long show instead of a half-hour show,” he jested. “We’ll cross that bridge if we get to it.”

      Michelle Maisto
      Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.
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