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Dish Network makes $25.5-billion bid for Sprint

April 15, 2013|By Joe Flint
  • Satellite broadcaster Dish Network Corp. has made a $25.5-billion bid for Sprint Nextel Corp.
Satellite broadcaster Dish Network Corp. has made a $25.5-billion bid… (Paul Sakuma / Associated…)

Satellite broadcaster Dish Network Corp. has made a $25.5-billion bid for Sprint Nextel Corp.

If consummated, the deal would combine one of the nation's biggest pay-TV providers with the third-largest wireless communications company.

The unsolicited Dish offer, which was announced Monday morning, is aimed at derailing Sprint's plans to merge with Japan's SoftBank Corp, a proposed deal valued at $20 billion. The Dish offer is made up of $17.3 billion in cash and $8.2 billion in Dish stock.

"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," Dish Chairman Charlie Ergen said in a statement. 

Dish said its offer -- valued at $7 per share -- is a "superior alternative" to the SoftBank proposal.

"Sprint shareholders will benefit from a higher price with more cash while also creating the opportunity to participate more meaningfully in a combined DISH/Sprint with a significantly-enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal," Ergen said. 

The aggressive move is typical of Ergen. Even in the news release announcing Dish's offer, the company describes itself as a "technology leader with track record of disrupting entrenched incumbents."

But it may also be a sign that Ergen has concerns about the future of the pay-TV business. Dish has about 14 million subscribers but faces intense competition from other distributors at a time when programming costs continue to skyrocket.

Furthermore, younger consumers are increasingly bypassing pay-TV in favor of Netflix and other digital platforms for entertainment fare.

Getting into bed with Sprint would provide Dish the ability to package Internet and phone service with its satellite offerings. Dish has been acquiring spectrum on its own, but buying Sprint would give it an immediate formidable presence.

In a letter to the Sprint board of directors, Ergen said a merger with Dish "will result in synergies and growth opportunities estimated at $37 billion in net present value." Ergen estimated that there would be $11 billion in savings as well.


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