April 29, 2013 9:33am PT by Eriq Gardner
Dish Network's $25.5 Billion Sprint Bid Sparks Furious FCC Lobbying
Two weeks ago, Dish Network made a bold and surprising $25.5 billion bid for Sprint Nextel. If the deal goes through, it will combine the third-largest mobile operator and the third-largest pay-TV service and help Dish in its effort to become one of the leading providers of mobile video services.
Sprint must weigh Dish's big offer against one made by Japan's SoftBank Corp., which is proposing to buy a 70 percent stake for $20.1 billion. Sprint has tentatively set a June 12 proxy vote on the Softbank offer, but just as important might be what's happening at the Federal Communications Commission as the government agency reviews the corporate jockeying.
Just last week, according to papers filed with the FCC, Dish chairman Charlie Ergen got on the telephone with outgoing FCC Chairman Julius Genachowski. Also, Intel Corp CEO Paul Otellini sent an email to Genachowski with his endorsement that it be Softbank rather than Dish that acquires Sprint.
The maneuvering is hardly simple. With a cash injection from Softbank, Sprint hopes to acquire the remaining shares of Clearwire, the seventh largest cellular network in the U.S., to bolster its wireless spectrum and customer base. Dish has been aggressively making its own bid for Clearwire spectrum.
The FCC has been tasked with reviewing the potentially Softbank-controlled Sprint acquiring Clearwire.
After Dish announced that it would attempt to rip Sprint from the potential fingers of Softbank, its next move was to go to the FCC and request that the agency hold off on any approval.
"DISH is not asking the Commission to intervene in a proceeding on behalf of one party over another," its lawyers wrote to the FCC on April 17. "Rather, DISH is seeking to have the Commission follow an orderly and deliberative process."
That drew an angry reaction from both Softbank and Sprint. On April 19, lawyers for the two companies jointly filed an opposition to Dish's request and had this to say:
"DISH wrongly suggests that it would be prudent for the Commission to derail this review while it waits until an alleged uncertainty – uncertainty that DISH itself is attempting to create by its unsolicited proposal – is resolved. DISH has this exactly backwards. The Commission has been working diligently on the pending applications, which now stand at day 140 of the Commission’s shot clock. The Commission must not be distracted by DISH’s latest maneuverings, just as it was not distracted by DISH’s original request, and, based on long-established precedent, continue the orderly processing of the applications to conclusion.”
Clearwire, too, was adamant that that the FCC not delay.
"Delay would also be contrary to the public interest because it potentially threatens Clearwire’s financial condition, as our Chief Executive Officer explained to Commission officials last month," the company told the FCC. "In a recent filing with the Securities and Exchange Commission, Clearwire was even more specific: '[i]f the Merger is not completed, we may be forced to explore all available alternatives, including financial restructuring, which could include seeking protection under the provisions of the United States Bankruptcy Code."
Dish is not letting the opposition go unanswered.
On April 24, Ergen got on the phone with Genachowski and urged him to see the benefits of a Dish-Sprint deal. Among the points pressed by Ergen, according to a summary of the conversation, was how certain wireless spectrum would "lie fallow under Softbank's ownership" and how "DISH’s existing installation capabilities could offer nationwide installation of fixed wireless antennas on top of consumers’ homes, thereby delivering cable-quality speeds to unserved and underserved areas."
Not everyone sees the benefit of a potential Dish-Sprint marriage. Now, one company interjecting itself is Intel, which is working on plans to soon introduce a set-top box that will deliver IPTV to consumers. As a potential "virtual cable operator," Intel would stack up as a rival to Dish, which is currently the third largest distributor of pay-TV programming.
Intel CEO Paul Otellini has now made it clear which company he prefers in the fight over Sprint. On the same day that Ergen was speaking to Genachowski, Otellini sent this e-mail to the FCC chairman:
"I am travelling in Asia this week. I met with Son-san of Softbank yesterday. I simply wanted to add my name to the list of companies hoping that Softbank will be able to acquire Sprint, rather than Dish. Son-san’s vision to build a high speed competitive third national network is very compelling. We need this competition in the wireless space as the ATT/Verizon model is not giving that to consumers at this time. I just wanted you to know where I and Intel stand on this important matter."
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