Dish Stock Rebounds as Analysts Discuss Fallout from FCC Decision on Wireless Acquisitions

2:31 PM PST 03/05/2012 by Georg Szalai
Alex Wong/Getty Images

Charlie Ergen's satellite TV giant will likely continue to pursue its wireless strategy, but the chairman "may act, should timing or concessions become increasingly unfavorable," says one analyst.

NEW YORK - The stock of Dish Network dropped in early Monday trading, but closed up slightly as analysts discussed the future of the satellite TV giant's wireless ambitions following a late Friday FCC decision that failed to bring a final resolution.

As of 11:05am ET, Dish's stock was down 2 percent at $28.69 as investors seemed to struggle with the lack of clarity, but it finished 0.4 percent higher at $29.40.

On Friday, the FCC granted Dish the transfer of license for two planned wireless spectrum acquisitions worth billions, but denied the company a waiver it had hoped for. The result: Dish must wait for a broader FCC rulemaking.

Dish chairman Charlie Ergen had recently said that a failure to get the waiver could lead the company to look at alternatives to closing the wireless deals.

But following the FCC decision, Dish sounded a somewhat more patient note. "Although we are disappointed that the FCC did not grant the integrated service and spare satellite waivers that Dish requested, we appreciate the cooperative spirit and diligent efforts of the Commission and its staff in reviewing our applications," it said. We believe that the denial of those waivers will delay the advancement of some of President Obama's and the FCC's highest priorities - namely freeing up new spectrum for commercial use and introducing new mobile broadband competition. As we review our options, we will continue working with the FCC…We expect to close the DBSD and TerreStar transactions as soon as practicable."

Wells Fargo analyst Marci Ryvicker was among those trying to assess the FCC decision's effect on Dish. "Unfortunately, there is still uncertainty, which could weigh on the stock," she wrote.
"Does Mr. Ergen sell on this news? At this point, probably not. But Mr. Ergen may act, should timing or concessions become increasingly unfavorable."

Barclays analyst James Ratcliffe predicted that "the spectrum will eventually be put to use…and with at least some upside for Dish."

Evercore Partners analyst Bryan Kraft suggested that it would take 6-12 months before the FCC's final order is released. "The granting of Dish's waiver requests would have been the best outcome for Dish and its shareholders as it would have maximized Dish's flexibility to pursue partnering on a wireless business plan and to entertain interest from potential suitors," he said. "Despite our confidence in the ultimate outcome, there is now added uncertainty that creates challenges in fully pursuing either of these options until the rulemaking process is complete."

But he also suggested that "the underlying value of the spectrum is still intact and, in fact, might increase between now and the completion of the rulemaking process." Like others, he did not change his price target on Dish's stock.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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