(Bloomberg Opinion) -- Players beware when Charlie Ergen holds all the cards. As T-Mobile US Inc. and Sprint Corp. continue to fight in Washington for their long-awaited merger, the wily satellite-TV billionaire is the companies’ best hope for getting the deal through. Unless, of course, he walks away.
Ergen, the 66-year-old chairman and co-founder of Dish Network Corp., has a reputation for being an finicky dealmaker, with a tendency to upset merger processes and then drop out. The former professional poker player would say he’s simply not afraid to fold his cards – or alienate his peers. Case in point: A few years ago, Ergen offered to buy both Sprint and Clearwire, which then turned into a bidding war against Sprint for Clearwire, a collection of wireless-spectrum assets. Ergen ultimately gave up on both pursuits, but not before driving Sprint to pay about 70% more than it initially bid. Sprint got Ergened.
Back to present day, and what do you know: Sprint’s fate pretty much rests in Ergen’s hands, as the U.S. Department of Justice determines whether to approve or reject its $59 billion takeover by T-Mobile. Makan Delrahim, the DOJ’s head of antitrust, reportedly wants the companies to divest assets that could be used to create a new viable fourth competitor as a check on the industry’s pricing power. So Ergen, who had been among the merger’s biggest opponents, is now ostensibly ready to be the deal’s savior by acquiring those assets and committing to morphing Dish into a full-fledged wireless carrier. Maybe.
Over the years, Ergen had gamed the government auction system to scoop up Dish’s own valuable spectrum licenses, which have a use-it-or-lose-it provision with nearing deadlines. Taking on the scraps from the T-Mobile-Sprint deal could ease that pressure and help Ergen make good on his promises to build a network. But if unnamed sources cited by the New York Post are to be believed, Deutsche Telekom AG, T-Mobile’s parent, is insisting it will only hand those assets to Dish if it vows not to sell more than a 5% stake in itself to a third party such as Google or Amazon.com Inc., which are two giant would-be threats to the industry.
It makes sense that T-Mobile’s side would be worried about Dish teaming up with one of those deeper-pocketed companies, as I wrote last month. And agreeing not to do so certainly isn’t in Dish’s best interests. Ergen has said he needs a partner for Dish’s network build-out, which presumably would entail some sort of shared ownership.
For that reason, Ergen could just walk away once again. Without him, there may be no T-Mobile-Sprint merger. After all, 13 states and the District of Columbia have sued to block the deal in a trial that may start in October. No deal could also mean T-Mobile turns to Dish to fulfill its spectrum needs.
“Charlie is very hard to understand and predict,” billionaire dealmaker John Malone, owner of the Liberty media assets and director emeritus at Charter Communications Inc., said of Ergen a few years ago. “He’s very creative, but he’s a poker player.” (Ironically, Fox Business Network reported that because some at T-Mobile and Sprint are skeptical of Ergen’s dealings with the DOJ, they’re “praying” Charter and Malone will bid for the divested assets.)
John Legere, T-Mobile’s outspoken and genial CEO, has been an ideal pitchman for the deal, smoothly handling inquisitions by Congress over the past year and constantly using his highly followed social media channels to promote the merger. But his style may be no match for Ergen’s whimsy. At the end of Legere’s latest episode of “Slow Cooker Sunday” this week – where he demonstrated recipes for Cajun corn on the cob and lemon feta drumsticks – the magenta-apron-wearing executive took a moment to make a wish. I think I know what it was.
This may be the week that finally yields a decision from the DOJ, and what that decision will be is still anyone’s guess. But what I can say for certain is something I’ve said many times before: Good luck betting against Charlie Ergen.
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Tara Lachapelle is a Bloomberg Opinion columnist covering deals, Berkshire Hathaway Inc., media and telecommunications. She previously wrote an M&A column for Bloomberg News.
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