* Ergen says options include selling Dish if Sprint bid
* Says could partner to bid or sell assets if deal becomes
* Adds 36,000 net subscribers vs estimate of 68,000
By Liana B. Baker and Sinead Carew
May 9 Acquiring Sprint Nextel is so
important to Dish Network Corp that founder Charlie
Ergen said he could consider selling the company altogether if
he loses a bidding war with SoftBank Corp.
Ergen also proposed a number of other possible outcomes on
Dish's quarterly conference call where he fought back against
SoftBank founder Masayoshi Son's criticisms of the Dish bid.
The executive said he could take on a bidding partner or
sell some non-core Dish assets to pay down debt if a bidding war
with SoftBank becomes too pricey. Dish made a $25.5 billion
counter bid last month for Sprint against SoftBank's October
agreement to pay $20.1 billion for 70 percent of Sprint.
"If we're unsuccessful with Sprint, obviously we have a lot
of options." Ergen said. "It could include selling spectrum. It
could include selling the whole company. It could include
partnering with somebody else in the wireless business."
However the billionaire maverick who has a reputation for
tough deal-making said that above all else, he wants to buy
Sprint, the No. 3 U.S. mobile service provider.
"Our preference is Sprint. That's our focus," he told
analysts and reporters on the conference call.
Dish wants to expand into wireless services as growth is
slowing in its satellite TV business, which faces tough
competition from cable, telecom and Internet video providers as
well as satellite TV rival DirecTV.
So a combination of Dish with DirecTV, would be much less
attractive than a Sprint deal, Ergen told analysts in response
to a question about the possibility of a DirecTV deal.
"While there would be a lot of synergy and it would be
bigger, it would be the same company," Ergen said adding that
such a company would eventually need to be transformed
"because the video business is mature and ultimately will
go into decline."
Ergen did not say who could partner with Dish if it needed
more financing than it could raise alone to win Sprint.
If it loses Sprint, Dish could partner with another operator
such as No. 4 U.S. mobile service provider T-Mobile US
to help develop its wireless service.
But Ergen said Sprint would be a much better option than
T-Mobile US because of its size and the amount of spectrum
Sprint owns through its majority owned venture Clearwire Corp
In response to Son's warning to Sprint shareholders that a
Dish deal would load down Sprint with too much debt, Ergen
argued that he could reduce debt leverage in a few years or even
sell assets if it needed to pay back debt sooner.
Another criticism about Dish's bid for Sprint was the fact
that it has not yet made a firm commitment to raise the $9.3
billion financing it needs to buy Sprint, which formed a special
committee of independent directors to review the Dish offer.
After telling analysts that Sprint has not yet let Dish look
at its books, Ergen vowed to make a firm financing commitment
only when it is the last obstacle preventing him from gaining
access to Sprint's books.
"The firm commitment does have a cost to us," Ergen said
adding that he doesn't want to incur those costs unless Sprint
is seriously considering his bid. "Our bid is contingent on the
fact that we get to do due diligence."
Janco Partners analyst Gerard Hallaren said Ergen's comments
"puts pressure on the special committee to explain its view."
"Like many, we believe Dish has made a superior offer for
Sprint than has SoftBank. The risk is that Sprint's board will
favor an offer that preserve's at least some of their positions
even if it jeopardizes shareholder wealth," Hallaren said.
Wunderlich Securities analyst Matthew Harrigan saw Ergen's
laying out of all his options as the strongest indicator so far
of the extent of his determination to buy Sprint.
"It certain seems like both sides feel its a huge strategic
priority this deal gets done," Harrigan said.
The conference call came after Dish reported its quarterly
earnings. In the first quarter, it added a net 36,000
subscribers, down from 104,000 a year earlier. Analysts had
expected 68,000, according to StreetAccount.
Net profit fell to $215.6 million, or 47 cents per share, in
the first-quarter from $360.3 million, or 80 cents per share, a
Revenue dropped marginally to $3.56 billion, mainly due to a
weak performance of its Blockbuster video rental business, which
Dish bought in a bankruptcy auction in 2011.
Blockbuster revenue fell 46 percent to $180.3 million,
mainly because Dish sold the British unit of the video rental
company to private equity firm Gordon Brothers Europe.
Analysts on average had expected earnings of 53 cents per
share on revenue of $3.61 billion, according to Thomson Reuters
Shares of the Englewood, Colorado-based company closed down
81 cents or 2 percent at $38.80 on Nasdaq.