Grubman: Dish/Sprint Numbers Don’t Add Up to Shareholder Value

[kckid]

"For someone who made his name covering the 1990s explosion in the telecommunications sector, the “strategic logic” behind Dish Network’s bid for Sprint Nextel brings back bad memories." 

 

 

http://dealbook.nytimes.com/2013/05/29/grubman-dishsprint-numbers-dont-add-up-to-shareholder-value/?ref=jackbgrubman

 

 

[S4GRU]

"For someone who made his name covering the 1990s explosion in the telecommunications sector, the “strategic logic” behind Dish Network’s bid for Sprint Nextel brings back bad memories."

 

 

http://dealbook.nytimes.com/2013/05/29/grubman-dishsprint-numbers-dont-add-up-to-shareholder-value/?ref=jackbgrubman

 

 

 

Good read. And to close with the parallel of AOL/Time Warner was very powerful imagery of the doom of a future combined Sprint/Dish.

 

Robert via Nexus 7 using Tapatalk 4 Beta

 

 

[Mobilesolutions]

It has been Clear from the start. Sprint and soulmate Clearwire need to be left alone in the bedroom to conjure the TDD baby that will, combined with SMR and PCS lte position them a step ahead of the competition. If only Dish would quit the sad attempts to kindle a love that never existed and stop home wrecking.

[tommym65]

"For someone who made his name covering the 1990s explosion in the telecommunications sector, the “strategic logic” behind Dish Network’s bid for Sprint Nextel brings back bad memories." 

 

http://dealbook.nytimes.com/2013/05/29/grubman-dishsprint-numbers-dont-add-up-to-shareholder-value/?ref=jackbgrubman

A voice of reason in the wilderness, especially:

 

George Santayana said, “Those who cannot remember the past are condemned to repeat it.” Having witnessed the disasters for shareholders that past “mega-Media/Telecom” mergers like AOL/Time Warner or Vivendi/Universal created, Sprint shareholders would be wise to hang up on Dish.

 

Thanks for posting.

[Geekslayer]

I've been following all these posts about the Dish's proposal for Sprint/Clearwire, and I think it's horrible idea. Dish really doesn't have much to offer, even if they built a fast network, they don't have any "video content" to offer wireless subscribers anyway, except the video on the DVR Hopper. That Blockbuster purchase a couple of years ago didn't go very well. They don't have "anything" of value and that was 1-1/2 years after the buyout., so we stayed with Netflix. Having said all of that, I was in Chicago for three days last month and when I got back to the hotel room, I was streaming video from our Hopper at home to my phone, and I have to say that worked really well, that's the only angle I see in Dish's video quest right now.

[S4GRU]

I've been following all these posts about the Dish's proposal for Sprint/Clearwire, and I think it's horrible idea. Dish really doesn't have much to offer, even if they built a fast network, they don't have any "video content" to offer wireless subscribers anyway, except the video on the DVR Hopper. That Blockbuster purchase a couple of years ago didn't go very well. They don't have "anything" of value and that was 1-1/2 years after the buyout., so we stayed with Netflix. Having said all of that, I was in Chicago for three days last month and when I got back to the hotel room, I was streaming video from our Hopper at home to my phone, and I have to say that worked really well, that's the only angle I see in Dish's video quest right now.

 

And Charlie would monetize the Hopper mobile service. Expect to have that be an additional fee on top of what you already pay.

 

Robert via Nexus 7 using Tapatalk 4 Beta

 

 

[Geekslayer]

And Charlie would monetize the Hopper mobile service. Expect to have that be an additional fee on top of what you already pay.

 

Robert via Nexus 7 using Tapatalk 4 Beta

 

I understand you an AJ have disdain for Charlie (haha), and maybe rightfully so. For me, If it wasn't

for Dish we would still be with our Cable company or DirecTV. I'm glad they're putting pressure in that

area. In the end though, it's really up to the content providers..ABC,NBC, FOX, USA....etc. and what

kind of contracts they can work out with them. My wife wanted to get the Hopper, and I was dragging

my feet with it. I might be revealing my age when I say, I would never pay a fee to record something,

but it really does have value, because we can watch our shows, when we have the opportunity, and

that is where video is going. As far as your fee goes, I think the cat is out of the bag, since we can

watch on our mobile devices now. On the other hand, the content providers could see the value in

that and charge or block Dish from doing it I guess.

[jtravers]

And Charlie would monetize the Hopper mobile service. Expect to have that be an additional fee on top of what you already pay.

 

Robert via Nexus 7 using Tapatalk 4 Beta

 

Dish doesn't charge current subscribers any fees for "sling" access to their live or DVR'd content. The apps are free, website access is free, and the Sling device is either built in to the receiver or available for a nominal, one-time fee (they were even giving them away at one point). Why do you think they'll change their policy on this in the future? Seems to me that it would be a value add that would help gain and retain subscribers.

 

I know most on this forum don't like Ergen and Dish. I do agree that I think the Softbank deal makes more sense, but I am also intrigued by the possibilities of a combination with Dish just because of all the excess spectrum that will be available. BTIG research has been saying that Sprint/Softbank need to hurry if they want to close a deal because Dish may be hunting for a cash-rich partner to help them in their bid. If Dish is able to find a cash-rich partner, the one big downside of their deal (the huge debt load) would no longer be a concern -- and that would make the Dish deal stronger than it currently looks. Of course, that's all speculation, and right now the Softbank deal looks like the best strategically.

 

This is all so very interesting :-)

[S4GRU]

I understand you an AJ have disdain for Charlie (haha), and maybe rightfully so. For me, If it wasn't

for Dish we would still be with our Cable company or DirecTV. I'm glad they're putting pressure in that

area. In the end though, it's really up to the content providers..ABC,NBC, FOX, USA....etc. and what

kind of contracts they can work out with them. My wife wanted to get the Hopper, and I was dragging

my feet with it. I might be revealing my age when I say, I would never pay a fee to record something,

but it really does have value, because we can watch our shows, when we have the opportunity, and

that is where video is going. As far as your fee goes, I think the cat is out of the bag, since we can

watch on our mobile devices now. On the other hand, the content providers could see the value in

that and charge or block Dish from doing it I guess.

 

I don't have a problem with Dish's existence.  Someone needs to compete with DirecTV.  And everyone has a choice to be Dish customers and support Charlie Ergen, or not.  That's a great thing.  But we should not want Charlie Ergen to buy Sprint or Clearwire.

 

Robert

[S4GRU]

Dish doesn't charge current subscribers any fees for "sling" access to their live or DVR'd content. The apps are free, website access is free, and the Sling device is either built in to the receiver or available for a nominal, one-time fee (they were even giving them away at one point). Why do you think they'll change their policy on this in the future? Seems to me that it would be a value add that would help gain and retain subscribers.

 

I know most on this forum don't like Ergen and Dish. I do agree that I think the Softbank deal makes more sense, but I am also intrigued by the possibilities of a combination with Dish just because of all the excess spectrum that will be available. BTIG research has been saying that Sprint/Softbank need to hurry if they want to close a deal because Dish may be hunting for a cash-rich partner to help them in their bid. If Dish is able to find a cash-rich partner, the one big downside of their deal (the huge debt load) would no longer be a concern -- and that would make the Dish deal stronger than it currently looks. Of course, that's all speculation, and right now the Softbank deal looks like the best strategically.

 

This is all so very interesting :-)

 

Dish will have to monetize a Clearwire deal, or a Sprint/Clearwire deal, in order to pay for the large debt being incurred.  He will have to increase revenues dramatically.  He is not buying these companies for Billions to give free services to their current Dish customers.  He has to make a lot of money off of it.

 

What I hypothesize will happen is that Ergen will offer people to use streaming on the Dish/Clearwire/Sprint network for a flat monthly fee.  Or, so many hours per price point.  Then scrap all the free streaming currently offered.  The fees may not be so noticed, because they may be part of a bundle with home internet and cell phone service, but he will charge for it.  He has to.

 

Dish has no interest in making Sprint/Clearwire a competitor to AT&T and VZW.  He will use these spectrum assets and network for his own ambitious plans.  As a result, AT&T and VZW get more powerful, and huge amounts of spectrum resources will be wasted on ISP and video traffic...with a really small customer base to utilize it.  In my opinion, it's a disastrous scenario for consumers in the long run.  It will cause the duopoly to take a larger share of the pie, allowing them to raise rates.  SoftBank plans to compete directly with the duopoly, keeping competition and rates in check for years.

 

Robert

[maximus1987/lou99]

Dish will have to monetize a Clearwire deal, or a Sprint/Clearwire deal, in order to pay for the large debt being incurred.  He will have to increase revenues dramatically.  He is not buying these companies for Billions to give free services to their current Dish customers.  He has to make a lot of money off of it.

 

What I hypothesize will happen is that Ergen will offer people to use streaming on the Dish/Clearwire/Sprint network for a flat monthly fee.  Or, so many hours per price point.  Then scrap all the free streaming currently offered.  The fees may not be so noticed, because they may be part of a bundle with home internet and cell phone service, but he will charge for it.  He has to.

 

Dish has no interest in making Sprint/Clearwire a competitor to AT&T and VZW.  He will use these spectrum assets and network for his own ambitious plans.  As a result, AT&T and VZW get more powerful, and huge amounts of spectrum resources will be wasted on ISP and video traffic...with a really small customer base to utilize it.  In my opinion, it's a disastrous scenario for consumers in the long run.  It will cause the duopoly to take a larger share of the pie, allowing them to raise rates.  SoftBank plans to compete directly with the duopoly, keeping competition and rates in check for years.

 

Robert

 

Why would competing with ATT, VZW be incompatible with also doing his video thing?

 

And what about TMUS? lol

[S4GRU]

Why would competing with ATT, VZW be incompatible with also doing his video thing?

 

And what about TMUS? lol

 

Currently, Sprint/SoftBank is the best bet at competition for the duopoly.  Funding + competitive nature + low frequency spectrum + oodles of spectrum capacity.

 

Dish has shown no interest in having a wireless telecommunication network.  No quotes about that, or taking competition at all.  All Charlie talks about is getting spectrum and network for his purposes.  This will not be good for competition in the wireless market.

 

Robert

[maximus1987/lou99]

Currently, Sprint/SoftBank is the best bet at competition for the duopoly.  Funding + competitive nature + low frequency spectrum + oodles of spectrum capacity.

 

Dish has shown no interest in having a wireless telecommunication network.  No quotes about that, or taking competition at all.  All Charlie talks about is getting spectrum and network for his purposes.  This will not be good for competition in the wireless market.

 

Robert

 

I'm not saying I disagree. I just wonder if he's so obsessed with Dish, cause he founded it, that he wants to "save Dish or go down trying", taking with him Sprint+Clear.

Or if he can see that television as a standalone business has no future and no amount of spectrum to prop it up with save it.

[S4GRU]

I'm not saying I disagree. I just wonder if he's so obsessed with Dish, cause he founded it, that he wants to "save Dish or go down trying", taking with him Sprint+Clear.

Or if he can see that television as a standalone business has no future and no amount of spectrum to prop it up with save it.

 

I believe that Ergen could do his Dish plans by using his S-Band, at least for the first 4-5 years.  However, he is such a control freak, that he is afraid to do a network hosting deal with Sprint.  For two reasons, he wants Sprint to do it for less than a reasonable cost and he is afraid to get caught up depending on Sprint in the long run, especially renewals.

 

Charlie Ergen is paranoid.  A thief always think he's being stolen from, and a liar always think he's being lied to.  Charlie is incapable of making a deal, because he cannot work out a win/win deal and he always think he's going to get screwed.  Because that is his goal.

 

If Charlie had made reasonable terms with Sprint about network hosting and purchasing EBS leases from Clearwire before SoftBank was in the picture, this would be a non issue.  He would already have his contract, regardless of SoftBank when they made the move to purchase Sprint.

 

Now I believe Son/Hesse hate Ergen so badly that it will be impossible to make a deal.  The only thing Ergen can do now is fight to take over a network.  Because he has pissed off so many people in the wireless industry, he likely will not be able to make a nationwide hosting deal with anyone now.  Or, he will have to overpay for it, and have too short of a term.

 

That's why Ergen's moves always wreak of desperation...he is desperate.  He may have just screwed himself out of a network, unless he builds it organically from the ground up.  And it would be the most expensive and ambitious wireless project in American history if he does.  Being overly shrewd can backfire.  He will have to fight for Clearwire or Sprint until there is no fight left to physically fight.

 

Robert

[maximus1987/lou99]

I believe that Ergen could do his Dish plans by using his S-Band, at least for the first 4-5 years.  However, he is such a control freak, that he is afraid to do a network hosting deal with Sprint.  For two reasons, he wants Sprint to do it for less than a reasonable cost and he is afraid to get caught up depending on Sprint in the long run, especially renewals.

 

Charlie Ergen is paranoid.  A thief always think he's being stolen from, and a liar always think he's being lied to.  Charlie is incapable of making a deal, because he cannot work out a win/win deal and he always think he's going to get screwed.  Because that is his goal.

 

If Charlie had made reasonable terms with Sprint about network hosting and purchasing EBS leases from Clearwire before SoftBank was in the picture, this would be a non issue.  He would already have his contract, regardless of SoftBank when they made the move to purchase Sprint.

 

Now I believe Son/Hesse hate Ergen so badly that it will be impossible to make a deal.  The only thing Ergen can do now is fight to take over a network.  Because he has pissed off so many people in the wireless industry, he likely will not be able to make a nationwide hosting deal with anyone now.  Or, he will have to overpay for it, and have too short of a term.

 

That's why Ergen's moves always wreak of desperation...he is desperate.  He may have just screwed himself out of a network, unless he builds it organically from the ground up.  And it would be the most expensive and ambitious wireless project in American history if he does.  Being overly shrewd can backfire.  He will have to fight for Clearwire or Sprint until there is no fight left to physically fight.

 

Robert

 

In an article, someone suggested that Charlie is only bidding for Clearwire to force Sprint to make a deal with him to host his S-band.

This makes sense to me because Clearwire doesn't have a decent network - right? - so it wouldn't make sense for him to buy Clearwire and then still have to spend more money to get more/better infrastructure.

 

Can Sprint currently veto any Clearwire spectrum sales?

If yes, then a) Charlie truly is wasting everyone's time and the vocal Clearwire minority shareholders are deluded if they think Charlie's offers should somehow pressure Sprint to increase its offer.

 

However, Sprint did increase its offer. Why? Was it more psychological than anything?

[S4GRU]

 

In an article, someone suggested that Charlie is only bidding for Clearwire to force Sprint to make a deal with him to host his S-band.

This makes sense to me because Clearwire doesn't have a decent network - right? - so it wouldn't make sense for him to buy Clearwire and then still have to spend more money to get more/better infrastructure.

 

Can Sprint currently veto any Clearwire spectrum sales?

If yes, then a) Charlie truly is wasting everyone's time and the vocal Clearwire minority shareholders are deluded if they think Charlie's offers should somehow pressure Sprint to increase its offer.

 

However, Sprint did increase its offer. Why? Was it more psychological than anything?

I believe Charlie would rather have the Clearwire network host Dish, if he owned Clearwire, rather than a hosting deal with Sprint. This has gotten to the point it is bigger than just a Sprint hosting deal. If that's all he wanted, he could have closed that deal back in 2011 or 2012. Sprint was eager to host somebody, anybody. And Sprint was desperate for a hosting deal after LightSquared fell through.

 

There is nothing wrong with the Clearwire network. There is only a problem with Clearwire being under funded.

 

Yes, Sprint can stop any deal for Clearwire. Any spectrum sale, anything really.

 

Sprint increased its offer because it does really want Clearwire. And SoftBank really wants Sprint to have Clearwire. So they thought it may actually result in winning the shareholder vote. Sprint would love to close with SoftBank soon. Not run out the clock.

 

Robert

 

[maximus1987/lou99]

Is this total BS?

 

Analysts: SoftBank could 'walk away' from Sprint following Dish's bid for Clearwire Read more: Analysts: SoftBank could 'walk away' from Sprint following Dish's bid for Clearwire

 

http://www.fiercewireless.com/story/analysts-softbank-could-bail-sprint-following-dishs-bid-clearwire/2013-05-31

[ChadBroChillz]

In an article, someone suggested that Charlie is only bidding for Clearwire to force Sprint to make a deal with him to host his S-band.

This makes sense to me because Clearwire doesn't have a decent network - right? - so it wouldn't make sense for him to buy Clearwire and then still have to spend more money to get more/better infrastructure.

 

Can Sprint currently veto any Clearwire spectrum sales?

If yes, then a) Charlie truly is wasting everyone's time and the vocal Clearwire minority shareholders are deluded if they think Charlie's offers should somehow pressure Sprint to increase its offer.

 

However, Sprint did increase its offer. Why? Was it more psychological than anything?

 

That could possibly be his end game, but like Robert said, Dish cannot let a win/win deal happen, because it would mean they left too much on the table. Ergen must feel like the only winner. Charlie's current plans are to just become a minority shareholder that is a nuisance to Sprint until they get their deal. They have become so desperate as to have given up the spectrum purchase. 

 

Sprint/Softbank likely wants to get this deal done as soon as possible, so they can to a 100% makeover with Clearwire's spectrum. Softbank likely wants to build out one of the fastest( if not the fastest) network to go along with their aggressive pricing and unlimited data, then commence an all out marketing blitz. 

[ChadBroChillz]

Is this total BS?

 

Analysts: SoftBank could 'walk away' from Sprint following Dish's bid for Clearwire Read more: Analysts: SoftBank could 'walk away' from Sprint following Dish's bid for Clearwire

 

http://www.fiercewireless.com/story/analysts-softbank-could-bail-sprint-following-dishs-bid-clearwire/2013-05-31

 

I am sure their is a possibility, however, I believe it is very small. That possibility would be contingent on Clearwire's offer coming to fruition, which is not likely to happen, because their governance requirements would require Sprint approval, and they probably will not be able to get the 25.1% minimum they need, since Crest and others have already spoken against it. Crest is going to be a thorn in everyone's side. 

 

Softbank is looking long term. They could likely double their current offer for Clearwire and still come out ahead soon. Lets not forget that Softbank/Sprint could cover the losses with their ability to procure better deals for phones and equipment; or by subscriber growth.  Also, I believe that the 2.6Ghz spectrum will play a major part in LTE roaming. A lot of carriers are using that spectrum across the globe. 

 

[JeffDTD]

Robert's psychological analysis of Ergen is the best ive ever read.

 

Sent from my Note II. Its so big.

 

 

[WiWavelength]

I believe that Ergen could do his Dish plans by using his S-Band, at least for the first 4-5 years.

 

The problem for Charlie is that he no longer has S-band spectrum; he has 352 AWS-4 A/B block 20 MHz licenses across all 176 BEAs, including the Gulf of Mexico.  And those licenses are already on the clock.

 

The buildout deadlines are now three years, nine months away and ticking.  By itself, Dish would be hard pressed to finish national buildout in time.  Single protection site deployments are not going to cut it for these licenses because BEAs tend to be relatively large in area.  Plus, the FCC is apt to scrutinize closely the satisfaction of the construction requirements, since Dish came to the FCC specifically to get this lower value S-band satellite spectrum converted to much higher value terrestrial spectrum.

 

In the end, Charlie needs to find a hosting partner, acquire an existing network, or convince the FCC to let him sell off the spectrum to one of the big three -- all of whom are pushing the envelope of the spectrum screen.  Otherwise, he is in trouble with this former satellite spectrum that was supposed to be quite the coup.

 

AJ

[S4GRU]

The problem for Charlie is that he no longer has S-band spectrum; he has 352 AWS-4 A/B block 20 MHz licenses across all 176 BEAs, including the Gulf of Mexico.  And those licenses are already on the clock.

 

The buildout deadlines are now three years, nine months away and ticking.  By itself, Dish would be hard pressed to finish national buildout in time.  Single protection site deployments are not going to cut it for these licenses because BEAs tend to be relatively large in area.  Plus, the FCC is apt to scrutinize closely the satisfaction of the construction requirements, since Dish came to the FCC specifically to get this lower value S-band satellite spectrum converted to much higher value terrestrial spectrum.

 

In the end, Charlie needs to find a hosting partner, acquire an existing network, or convince the FCC to let him sell off the spectrum to one of the big three -- all of whom are pushing the envelope of the spectrum screen.  Otherwise, he is in trouble with this former satellite spectrum that was supposed to be quite the coup.

 

AJ

 

I may not have been clear, but I was speaking about that the S-band was enough spectrum to last him 4-5 years.  He would still need someone to host his network.  I addressed in this string about how he could not build an organic network from the ground up.  The scope of something like that would be unprecedented in wireless history and he would have to spend billions in extra funds to pull it off in such a reduced time scale.  Something that Charlie would never be willing to do.

 

Robert

[digiblur]

Also this mobile video from the Hoppah you guys were talking about is from Dish buying up Slingmedia and running that company into the ground. Totally killed my urge to buy another Slingbox. The same will happen with Sprint. How many Voom channels do you have left on Dish? Oh wait... The history repeated itself.

 

Sent from my little Note2

 

 

[WiWavelength]

I may not have been clear, but I was speaking about that the S-band was enough spectrum to last him 4-5 years.

 

Yes, I was really just using your S-band reference as a lead in, as I suspect that many of our readers are not aware of what regulatory obligations Charlie has gotten himself into by having the S-band converted to AWS-4.

 

AJ

[S4GRU]

Yes, I was really just using your S-band reference as a lead in, as I suspect that many of our readers are not aware of what regulatory obligations Charlie has gotten himself into by having the S-band converted to AWS-4.

 

AJ

Gotcha. I was falling asleep when I read it. I thought it was a correction.

 

Robert via Nexus 7 using Tapatalk 4 Beta