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Dish Proposes $25.5 Billion Merger With Sprint

15 Apr, 2013 By: Erik Gruenwedel

Satellite TV operator said merger would up video opportunities in the home and on the go

Dish Network April 15 said it submitted a $25.5 billion merger proposal to Sprint Nextel Corp. while dangling its spectrum capacity as bait for new products, subscribers, financial scale and related opportunities — including entertainment distribution.

The satellite TV operator said its merger offer to Sprint shareholders represents a 13% premium to the value of an existing offer from SoftBank, a Japanese wireless carrier.

Dish, which is the nation's third largest pay-TV operator, owns and operates Blockbuster LLC.

The offer includes $17.3 billion in cash and $8.2 billion in stock. Sprint shareholders would receive $7 per share, including $4.76 per share in cash and 0.05953 Dish shares per Sprint share. The equity portion represents approximately 32% ownership in the combined Dish/Sprint versus SoftBank's proposal of a 30% interest in Sprint alone.

“Sprint shareholders will benefit from a higher price with more cash while also creating the opportunity to participate more meaningfully with a significantly enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal,” Dish chairman Charlie Ergen said in a statement.

Ergen said a Dish/Sprint merger would offer consumers a nationwide bundle of in- and out-of-home video, broadband and voice services — including improved services to homes with inferior or no access to broadband.

“This unique, combined company will have a leadership position in video, data and voice and the necessary broadband spectrum to provide customers with rich content everywhere, all the time,” Ergen said.

Dish said the proposed combination would result in synergies and growth opportunities estimated at $37 billion in net present value, including an estimated $11 billion in cost savings.

“You can always rely on Ergen to stop a party. He's a disruptive force in the telecom and TV industry,” Roger Entner, a telecom analyst at Recon Analytics, told USA Today. “He needs to have a partner in the wireless world to make his investment in his wireless spectrum worthwhile.”


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