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Ergen: Dish Open To Carrier Partnerships, Mergers

ENGLEWOOD, COLO. – Dish Network remains open to just about any option that will help it launch its planned cellular voice and data network, Dish chairman Charlie Ergen said during a recent conference call with investors and reporters.

The options could include an acquisition of T-Mobile or partnerships with carriers such as Sprint and TMobile, Ergen said.

Dish also remains open to a merger with DirecTV in the mature satellite-TV business, he said. A merger “makes a lot of sense” given that the merged companies would have greater leverage with the big five programming groups, which are raising content prices at a rate of four to five times that of inflation, he said. Consolidation of cable companies might also drive the two companies together to level the playing field, he said.

Dish also remains interested in acquiring unused spectrum owned by Lightsquared, which is in bankruptcy, even though a bankruptcy judge shot down Dish’s $2.2 billion bid for the company. The judge wanted Dish to come to the court with a bid that had the backing of Lightsquared’s management, Ergen noted.

Lightsquared spectrum, however, is “not a musthave” for Dish, in part because some of the spectrum was found to interfere with GPS equipment, he said.

As for potential cellular-carrier acquisition targets, the only potential target at this point would be T-Mobile, Ergen said, because of Sprint’s recent acquisition of Clearwire, SoftBank’s acquisition of a majority of Sprint, T-Mobile’s acquisition of MetroPCS, and AT&T’s planned acquisition of Leap Wireless. T-Mobile owner Deutsche Telekon has made it known it would sell TMobile for the “proper consideration,” Ergen noted.

Potential wireless-carrier partners include Sprint, Ergen said. He cited the aggressiveness of new majority owner SoftBank and Sprint’s ample national spectrum for video over LTE following the acquisition by Sprint’s of the portion of Clearwire that it didn’t already own. Dish “will fit pretty well with where they might want to go,” Ergen said of Sprint.

When asked about a potential Dish-DirecTV merger, Ergen noted that one holdup is the two companies’ slightly different strategic directions. Unlike DirecTV, Dish wants to move into wireless voice and data service and into video over cellular outside the home, Ergen explained.

Government regulators are another potential hurdle, though the market has changed since Dish and DirecTV withdrew their first merger agreement in late 2002 because of federal regulators’ antitrust concerns, he said. “It’s a different environment today,” Ergen contended, noting that telcos AT&T and Verizon have entered the pay-TV business and that over-thetop (OTT) video services have proliferated.

Dish remains committed to entering the wireless voice and data market because current video service offered by Dish featuring multiple linear channels is a “mature” opportunity, Ergen said. He said he sees “tremendous opportunity” for Dish and its content providers to take video outside the home to tap higher profits made possible by “more-targeted advertising.”