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Clearwire Corporation (CLWRD) Message Board

  • pottieboy pottieboy Feb 20, 2013 3:59 PM Flag

    Dish Presses Its Case on Clearwire: WSJ article... Please copy and paste if you have access to this story.

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    • I didn't read Ergen's comments aside from the headline but what has Japan done in the last 65 years that would warrant saying anything to the effect that Japanese ownership of spectrum is unacceptable? Wonder if he could get away with that sort of stuff if he said it about a non-Asian.

      • 1 Reply to cohsgrad
      • Your's is another lame post.. this board has good heads on it that see this as basic background information you can easily Google to find.

        However: The DOJ and FCC comply with laws and rule-making precedent about foreign ownership... the basic rule says that for carriers with more than 10% marketshare, foreign ownership of more than 25% is to subject to review and possible ruling that it violates the general rule making. These are "rules meant to be broken" as has been the case with Verizon and T-Mobile's foreign ownership. The DOJ is reviewing the case because the degree of ownership far exceeds the general rule and will encompass such a large amount of spectrum. Analysts generally concur that the deal will be allowed to go through but, perhaps, with some spin out of spectrum and provisions for public safety and defense concerns. The problem is not that this is a Japanese company.. probably the same issues would come up if it were German company DT, or even a Brit company. Also, anytime a deal of this magnitude comes up it is likely to drive out the cockroaches: Competitors, some who already have had designs on doing a deal with Sprint and/or Clearwire in the past, can seize on the deal to push back on the formation of the new competitive threat in an attempt to nullify it or offset it by participation.

        As it always was.


      Dish Network Corp. DISH -0.17% Chairman Charlie Ergen made his case for why Sprint Nextel Corp. S -1.78% should accept Dish's offer for its half-owned wireless affiliate Clearwire CLWR -0.95% Corp, arguing such a deal would provide capital for both Clearwire and Sprint.

      Mr. Ergen also said that if Sprint accepted Dish's offer, it would be Dish's "most likely partner" in a wireless network. But he said if Dish doesn't succeed with the bid, "then Sprint's probably not a likely partner."

      Dish has confirmed that it made an offer to buy Clearwire for $3.30 a share, along with offering to pay $2.2 billion for about a quarter of Clearwire's spectrum. The takeover offer is pitched at an 11% premium to the offer that Sprint made late last year. Sprint owns half of Clearwire but doesn't exercise control of the company. Mr. Ergen said because Sprint doesn't control the board, Dish has "an actionable item" in front of Clearwire.

      Speaking on Dish's fourth-quarter earnings conference call, Mr. Ergen argued that Dish's deal for Clearwire "provides a superior offer to shareholders…versus the Sprint offer" and "a good deal for Clearwire because they [will] get much-needed capital." Mr. Ergen said it's also "not a bad deal for Sprint because they end up with a lot of capital to help their buildout."

      "Sprint and Dish match up pretty well with where our spectrum is," Mr. Ergen said. "Sprint has publicly talked about a network vision to build a network to be shared by other people."

      He said Clearwire wasn't Dish's only option. Mr. Ergen said that Dish will have a better indication of the competitive landscape come June, once the other merger deals in the wireless industry come up for shareholder vote in the coming months. "As these mergers and partnerships…go through, the FCC will weigh in and ultimately" will signal to Dish "'yes, we want Dish in the business or no, we don't care,'" Mr. Ergen said. "Then obviously selling the spectrum becomes more of a reality."

      Dish's fourth-quarter earnings fell 33% as the company said it saw higher programming expenses and charges related to its Blockbuster U.K. arm.

      The satellite operator added 14,000 pay-TV subscribers in the quarter, compared to 22,000 in the year-ago quarter. Its full-year results showed a turnaround from the year prior, as it added 89,000 pay-TV subscribers, compared to losing 166,000 in 2011. The company attributed the subscriber gains in part to increased awareness of its heavily promoted Hopper set top box, which grabbed attention last year because of an automatic ad-skipping feature that prompted the wrath of broadcasters, as well as litigation.

      But those gains came at a cost. Subscriber acquisition costs rose 12% to 1.687 billion in 2012. Increased programming costs largely contributed to the 6% increase in subscriber-related expenses to $7.25 billion. Those expenses totaled 55% of total revenue, compared to 53% in 2011.

      Dish reported a profit of $209.1 million, or 46 cents a share, for the fourth quarter down from $313 million, or 70 cents a share a year earlier. Revenue declined 1.2% to $3.59 billion.

      Net income for the full year fell 58% to $637 million from $1.52 billion in 2011, primarily because of a $730 million lawsuit settlement with AMC Networks Inc. AMCX +1.18% and Cablevision Systems Corp. CVC -1.57% Dish also attributed the decline to higher programming costs and increased advertising related to the Hopper.

      Dish also reported out its Internet-access subscribers for the first time, on the heels of its first full quarter of operating a branded national broadband service called dishNET, aimed at underserved and rural markets. The satellite operator added 78,000 broadband subscribers during 2012, more than half of which came in the fourth quarter, compared to a loss of about 5,000 subscribers in 2011. Broadband -services revenue came in at $95 million for all of 2012, still less than 1% of Dish's total subscriber-related revenue. Dish reported 183,000 satellite and wireline broadband customers as of the end of 2012.

      The Blockbuster segment reported an operating loss of $35 million in 2012 compared to $1 million the year prior, primarily due to charges associated with its U.K. arm, which is undergoing an administration process akin to Chapter 11 bankruptcy in the states. In a regulatory filing, Dish said that it is still reviewing the cost of maintaining Blockbuster's retail store presence in the U.S. and could close additional stores this year. It is currently operating about 500 stores, down from the roughly 1,700 it inherited when it bought Blockbuster out of bankruptcy in April 2011.

      • 3 Replies to blade2kx
      • Another Ergen question. Why not partner with Clearwire with the agreement that they remain an independent entity? Seems pretty inconsistent to me to say yea we'll work with Sprint if we get to control CLWR and purchase spectrum but if Sprint owns it forget it.

        Why would anyone talk to the guy?

      • Softbank could well end up recognizing the value in dish's programming content in a 3-way deal... as well as the capital contribution to the buildout. Ergen is clearly speaking to Sprint's stated views on network sharing and it's questionable whether or not softbank would reject those views given the catch-up it needs to play in wireless.

        If Ergen saves sprint/softbank the $billions it would need to buy 49% of clearwire AND provides cap-ex AND contributes content, it could be viewed as a win-win-win if egos don't get in the way... especially if the FCC looks more kindly on the more distributed ownership of spectrum among players that it may want to empower in it's quest for more healthy competition with Verizon and AT&T. The $3.30 would still be a tough pill to swallow, but a small, additional sweetner as part of a 3-way deal that looks to pluck public shareholders out of Kellett's and Crest's corner could seal it and solve this hairball once and for all.


      • Thank you for posting it!!