Dish Buying Sprint
April 16, 2013 by staff
Dish Buying Sprint, The news that Dish has made an unsolicited proposal to Sprint sounds crazy at first blush. From a revenue and size perspective, it’s like a snake eating a horse, with Dish most certainly the serpentine player booking about $14 billion in revenue in 2012 versus just north of $35 billion for Sprint.
But even with an estimated $36 billion-plus in debt that any new Dish/Sprint (Sprish?) combo would have to shoulder, it makes sense. Not just from Dish Chairman Charles Ergen’s vantage point, but for every smartphone-toting Game of Thrones addict who cares about the future of TV.
For starters, Ergen could pull this off. The Dish chairman isn’t one to shy away from perhaps biting off more than he can swallow. You don’t build a satellite company from scratch any other way. But the satellite business has reached its limits in many ways, and Ergen wants more. During a conference call to discuss the proposed merger, Ergen told investors, “we know that people want video, and they want to look at video anywhere they are, in a convenient manner.” According to Ergen, the Dish/Sprint company would be your one-stop for all your over-the-air media needs.
Dish is happy to ruffle the feathers of the industry to get what it wants. Its Hopper technology that skips commercials has raised the ire of CBS. And during a recent interview at the Dive Into Media conference, Ergen floated the idea that Dish would be glad to offer a la carte pay TV if the networks would be willing to unbundle premium channels. For years now, viewers have been begging for just exactly that. What Dish does’t have is a unified way to broadcast onto mobile devices. Which is why Ergen and Dish would bet the farm on a $25.5 billion offer for Sprint.
According to Ergen the merger would allow Dish to stream live TV to mobile devices. Want to watch Game of Thrones on the go without a Slingbox (a company that Dish also acquired), just fire up your Sprint phone and watch the Starks battle the Lannisters. In the scenario Dish envisions, viewers would pay for one bundle of mobile and TV.
Watching TV on your phone on the subway is exciting, but more exciting is the possibility that Dish could create a mobile-only TV bundle. With smartphones capable of HD 1080p output, a phone could become a mobile TV antenna. Want to watch the game at a friends’ house but they don’t have a pay-TV subscription? Bring the game with you on your phone. TV anywhere could be more than just squinting at a tiny screen. It could be Dish’s bet on the future.
Both of these companies are willing to take risks that usually make consumers happy. Sprint still offering unlimited data when other carriers have hidden behind tiered data caps. These risks could work out wonderfully for consumers. But Dish isn’t doing this for the sake of making people happy, it’s doing this because it needs to. Dish needs Sprint to fulfill Ergen’s desire to give everyone video everywhere. It has the satellites and the content for regular TV, but it needs an established carrier to deliver that content everywhere (and make use of the billions Ergen has already spent on wireless spectrum). By delivering that content everywhere, Ergen leapfrogs the traditional cable satellite providers with one acquisition. A very pricey acquisition, but something that will give Dish/Sprint a lead in the future of TV delivery.
A future where satellite dishes are replaced with smartphones and tablets that are connected to HDTVs. It’s a play for the same market that Intel is planning on launching into later this year. Streaming TV not through the traditional coaxial cable, but thru the tubes of the Internet. Ergen was quick to point out that this offering would in no way surpass hardwired solutions like FIOS. But, as mobile data gets quicker, it won’t matter because we’ll be watching time shifted Mad Men in the airport.
Although Ergen would have you believe his deal is so superior it’s all but done, the horse trading is far from over. Japan’s Softbank, which has already offered $20.1 billion for 70% of Sprint, will mostly certainly up its bid. Dish in response might be forced to do the same. But if you care about mobile TV and a la carte subscriptions, keep your fingers crossed that Ergen and his satellite pirates win this bidding war.
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