With surprise $25.5 billion offer for Sprint, Dish Network topper Charlie Ergen has placed his biggest bet yet on wireless data and video as key to the satcaster’s future as a bundled services player – and a clear signal of urgency he feels as growth in traditional pay TV has maxed out.
Ergen has amassed considerable wireless spectrum holdings to date and he’s clearly desperate for wireless to drive growth for Dish, whose fortunes – like rival DirecTV – have largely been tied to a single service: subscription TV.
“A transformative Dish/Sprint merger will create the only company that can offer customers a convenient, fully integrated, nationwide bundle of in- and out-of-home video, broadband and voice services,” Ergen said in announcing proposed deal.
Ergen spins the deal as paving the way for a Dish/Sprint combo to be the ultimate TV provider, slinging content to devices everywhere. Dish’s plan may be to use the Slingbox technology – the legality of which broadcasters are now challenging in court – to do this.
Dish is offering Sprint shareholders $7.00 per share, comprising $4.76 in cash and stock, representing approximately 32% in the combined Dish/Sprint entity.
Ergen, a litigious entrepreneurial exec with a penchant for gambling, is trying to beat an offer from Japan’s SoftBank, which has offered $20.1 billion for a 70% stake in Sprint. According to Dish, the cash portion of its proposal is 18% higher than $4.03 per share implied by the Softbank proposal.
Sprint, in a statement, 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.”
According to Dish, deal would delivers synergies and growth opportunities estimated at $37 billion in net present value, including an estimated $11 billion in cost savings. Barclays is financial adviser to Dish on Sprint proposal.
Previously, Ergen launched unsolicited bid for Clearwire’s outstanding stock, above proposal from majority owner Sprint to acquire portion of Clearwire it didn’t own.
Sprint is the No. 3 wireless carrier in the U.S., after Verizon Wireless and AT&T, with 55 million customers. Dish, second-largest satcaster behind DirecTV, had 14.056 million subs as of end of 2012.