Charles W. Ergen is regarded as one of the wiliest negotiators in the business world. But in a little over a week, Dish Network’s chairman has been dealt two tough hands, at Sprint Nextel and at Clearwire.
Both may pose problems for his apparent dream of transforming Dish from a satellite television company into a bigger wireless services giant. That doesn’t mean that Mr. Ergen is walking away from deal-making altogether.
Dish has clearly signaled that it will walk away from Sprint, after SoftBank of Japan raised its takeover offer for the cellphone service provider to $21.6 billion. The company said on Friday that it would pay back $2.5 billion in recently issued bonds meant to back a Sprint takeover.
And though Dish seemed ready to buy a significant stake in Clearwire as recently as last week with a bid of $4.40 a share, Sprint’s revised offer of $5 a share on Thursday made that prospect seem dicier. With the newly sweetened proposal â€" Sprint’s third bid since last fall â€" roughly 45 percent of Clearwire’s independently h! eld shares are now expected to be tied to that approach.
Dish hasn’t commented yet on the latest counterpunch by its rival. But several analysts expect Sprint’s offer to prevail.
That leaves Mr. Ergen left trying to figure out how to realize his goal of expanding Dish’s purview. With growth in the satellite television slowing down, he has long sought to amass wireless spectrum to get ahead of whatever came next, enduring years of questions as to why he was spending so much on an apparently noncore asset.
Combining with a company like Sprint would have made Dish a strong new competitor to the likes of AT&T and Verizon, offering customers phone service, television and other media contnt, and heaps of speedy data connectivity.
But securing a phone service company is important, since it would give Dish additional negotiating power with phone companies and other equipment providers. Mr. Ergen has said that he is unlikely to build out a cellphone network on his own, once calling it “outside the grasp of reality.â€
Many have tried to guess at what Mr. Ergen is trying to do, and like a good professional card player (which he once was), he has kept his hand close to the vest. It’s possible that Dish has a backup plan in mind.
One possibility may be going after the newly enlarged T-Mobile US, which has closed on its merger with MetroPCS to become a newly strengthened low-cost cellphone service provider. Analysts largely believe that the company could eventually play a bigger role in industry consolidation. And it! s majorit! y owner, Deutsche Telekom, has already held discussions with SoftBank about several possible transactions. (Mr. Ergen reportedly held discussions with T-Mobile earlier this year as well.)
Another option for Dish may be continuing to entice other existing wireless service providers into a partnership or deal. Some investors have speculated that the goal may actually be to sell itself, though it’s unclear at the moment.
Mr. Ergen has shown that he’s willing to strike a deal. The question now is what will be his next play.
