Dish's 'Seinfeld' play: Sprint ties it all together
Dish founder Charlie Ergen has made some wild moves over the past few years, but it all goes back to owning a wireless business.
Dish founder Charlie Ergen is clearly a massive "Seinfeld" fan.
Ergen wasn't shy about providing a shout-out to Jerry Seinfeld's classic situation comedy in discussing Dish's.
In fact, Ergen compared his strategy to an episode of Seinfeld: 28 minutes filled with a lot of scenes that don't make sense, and a final two minutes where everything comes together.
For Dish, Sprint represents that final two minutes. The deal would be the linchpin to a strategy that Ergen said has been in the works for years. Ergen, who like many believes that the future is in mobile, has been steadily positioning himself for today's blockbuster offer, and believes that a Dish-Sprint combination can make waves in the industry by offering Internet, video, and mobile services anywhere.
"What's really exciting is the future," Ergen said on a conference call today. "This combined company can take advantage of the future."
The unsolicited bid will undoubtedly cause Sprint and its current merger dance partner, Softbank, to cry out "serenity now!" The companies were steadily on the path to getting their own deal approved when Dish threw a wrench into the process.
Sprint released a statement confirming the receipt of the offer, and its board will look at it. The company declined to comment further.
Ergen declined to comment on whether Dish would enter into a bidding war for Sprint, saying "we'll see what happens."
He did, however, hint at the possibility in yet another Seinfeld reference.
"We'll end up with a two-part Seinfeld episode," he quipped when asked about what would happen if Softbank walks away with Sprint. "They did a couple of those."
Ergen's other Seinfeld comment about things that don't make sense, meanwhile, is a reference to the various moves that Dish has made over the years. That includes the acquisition of multiple companies for their spectrum holdings, participation in government spectrum auctions, the takeover of Blockbuster, the acquisition of Sling Media, and the introduction of a more mobile-friendly Hopper home digital video recorder.
While some of the moves, such as its Hopper product, have helped the company's core satellite TV service, others have left investors scratching their heads.
Company observers have long asked about Ergen's wireless strategy, and he believes the answer is in Sprint.
Ergen used the conference call to state his case to Sprint and its shareholders.
Dish's subscriber base of nearly 14 million provides a potential new source of customers for Sprint. Dish's spectrum holdings, acquired through multiple deals and which Ergen valued at $8 billion to $12 billion, would pair well with Sprint's network, which is already being upgraded to handle different bands. Their common subscription-based business models could be consolidated.
The numbers that Dish floated have to intrigue Sprint shareholders. Ergen promised $24 billion in new business revenue opportunities. Dish also expects to save $1.3 billion in the first year by cutting redundant operations, with a final annual cost savings of $1.8 billion a year after the third year.
The companies' combined spectrum, with Clearwire also factored in, provides double the bandwidth of larger rivals AT&T and Verizon Wireless, according to Ergen. He talked about the potential benefits of combining its existing satellite and terrestrial spectrum with Sprint and Clearwire's respective swaths.
Ergen also talked about the potential to provide fixed broadband services that aren't served by the traditional telecom and cable providers. Clearwire already provides fixed broadband services, but would benefit from Dish's expanded distribution capabilities and experience dealing with rural customers.
Of the 110 million homes in the U.S., about 40 million or so don't have easy access to telephone company or cable Internet services, he said.
Ergen also opened the door to expand Sprint's current unlimited data offering, which is limited to smartphones, hinting at the possibility of unlimited data for tablets and other mobile devices. But he hedged heavily, saying that he would have to consult with Sprint's management team and look at their combined spectrum holdings before proceeding.
"With our extra capacity and Sprint's modernizing of its network, we can see what we can do for customers," he said. "Doesn't mean we would do it."
If Dish can nab Sprint from Softbank in a deal that would likely close toward the end of the year, it would be a happy Festivus indeed for Ergen and his gang.
Updated at 7:51 a.m. PT: to include a statement from Sprint.
(CBS, which owns CNET, is in active litigation against Dish over its Hopper digital video recorder.)