Dish Network Corp (DISH.O) would consider partnering with Sprint Nextel Corp (S.N), its rival in its pursuit of Clearwire, Chairman Charlie Ergen said on Wednesday following Dish's fourth-quarter results.
Ergen made the remarks on a conference call dominated by discussions about Clearwire, the telecommunications company Dish made a surprise $2.3 billion bid for on January 8. Dish allowed reporters to ask Ergen, who is usually press shy, questions on the call for the first time in years.
The call was also part of the No. 2 satellite provider's charm offensive with the media and follows Ergen's wide-ranging, candid interview at the D: Dive into Media conference last week.
The decision to make Ergen available comes about six weeks after the company he founded and controls was called the "meanest company in America" by Businessweek magazine. The feature story recounts how Ergen created a negative working environment at the No. 2 satellite provider based in Denver.
Ergen has been particularly vocal since Dish made an offer of $3.30 per share for Clearwire, which had already agreed to sell itself to majority owner Sprint for $2.97 per share. A special committee on the Clearwire board is still reviewing the offer. The Clearwire offer raises questions about Dish's future and Ergen's plans for the roughly $3 billion worth of wireless spectrum he bought over the last few years.
Dish has been looking to diversify beyond its core pay-TV business, which has matured and faces tough competition from cable, telecom and Internet video providers.
Some analysts have speculated that Ergen bid for Clearwire to give Dish leverage in negotiations with Sprint for a network partnership. Ergen indicated for the first time on Wednesday that the two issues might be related. He told analysts Dish would be much more likely to work with Sprint if the offer for Clearwire is accepted.
"It's not a bad deal for Sprint because they end up with a lot of capital to help their build out," Ergen told investors. "If that transaction was to happen, Sprint would be the most likely partner."
While Ergen told investors he has "plenty of time" to work out a wireless strategy, the company also noted that it hopes to run wireless technology tests by the end of this year. Dish also said it hopes its own wireless spectrum license will be confirmed by the end of March.
For its part, Clearwire has said it might not be possible for the company to accept the Dish offer because of conditions pertaining to its existing agreements with Sprint. Sprint called the deal "illusory" because it was too conditional.
Ergen, however, noted that Sprint does not yet have full control of Clearwire and he believes Clearwire should be able to accept his offer.
The Clearwire discussion overshadowed Dish's quarterly and year-end results on Wednesday. It reported a lower-than-expected quarterly profit and attracted fewer pay-TV subscribers than analysts had hoped.
It added 14,000 pay-TV subscribers on a net basis in the fourth quarter. Wall Street analysts were expecting net additions of 44,000 in the quarter, according to StreetAccount consensus data.
Profit fell 33 percent in the quarter as Dish spent more money to entice new customers and paid out roughly $700 million to settle a high-profile court battle with Cablevision Systems Corp CVC.N involving a high-definition programming joint venture that never got off the ground.
"There is nothing in the fundamentals here that is going to raise a red flag and at the same time it's nothing to get excited about," said Todd Mitchell, an analyst at Brean Capital. "Overall its a bit of a lethargic quarter."
Dish has also raised hackles with media companies with the launch of the Hopper, a new set top box that allows customers to skip commercials. It is currently involved in legal battles with broadcasters CBS Corp (CBS.N), Comcast Corp's CMSCA.O NBC, News Corp's (NWSA.O) Fox and Walt Disney Co's (DIS.N) ABC. Dish said all the prime time broadcasters have rejected ad spots for the Hopper.
Quarterly revenue dropped 1 percent to $3.59 billion. Profit fell to $209 million, or 46 cents per share, from $313 million, or 70 cents per share, a year earlier. Analysts on average expected earnings of 51 cents per share on revenue of $3.56 billion, according to Thomson Reuters I/B/E/S.
Dish added 78,000 net subscribers for its newly branded rural broadband service last year, compared with a loss of 5,000 net subscribers a year earlier.
Dish said on Friday that it was writing down the assets of its Blockbuster stores in the United Kingdom, resulting in a pre-tax charge of $46 million in 2012, according to a regulatory filing.
Dish sister company EchoStar Corp's (SATS.O) quarterly revenue fell to $786.2 million from $834 million a year ago.
Dish shares closed 6 cents, or almost 0.2 percent, down at $36.03 on Wednesday.
(Additional reporting by Jennifer Saba in New York and Sruthi Ramakrishnan in Bangalore; Editing by Peter Lauria, Joyjeet Das, Nick Zieminski and Andre Grenon)