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Dish May Be in Total Control of LightSquared Spectrum Auction

Paul Ausick

As the saying goes, “It ain’t over til it’s over,” and the bankruptcy auction for the assets of LightSquared L.P. may never be over. But at least it is a step closer.

On Monday a Manhattan bankruptcy judge approved an auction process that will include a stalking-horse bid of $2.22 billion by Dish Network Corp. (DISH) for 40 MHz of wireless spectrum held by LightSquared, a process that LightSquared and its principal owner, Harbinger Capital Partners, had originally objected to. The Dish bid is supported by creditors of LightSquared who are owed $1.7 billion.

The judge also set an auction date of November 25. Harbinger and others will be permitted to bid for the spectrum as well.

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To complicate an already tangled process, a pension fund that is a shareholder in Dish Network is suing Dish chairman Charlie Ergen for using his position as a Dish insider to purchase $1 billion in LightSquared debt through a company he owns that is not an affiliate of Dish Network. The suit seeks disgorgement of any profits Ergen makes from his purchase of LightSquared’s debt. Ergen has claimed that his investment vehicle, SP Special Opportunities, is not subject to the same rules as Dish Network and that it acquired the debt legally.

The spectrum that Dish wants to acquire was said by the FCC in May 2012 to be capable of interfering with certain global-positioning systems (GPS) and LightSquared’s license to use the spectrum was revoked. The FCC has done further testing on the spectrum and is again considering LightSquared’s application with some modifications.

The demand for wireless broadband spectrum is what makes this such a big deal. Dish Network tried and failed to acquire spectrum assets by making bids for Sprint Corp. (NYSE: S) and Clearwire Corp. before Sprint bought the assets of Clearwire that it did not already own and Softbank completed its acquisition of a majority position in Sprint. Dish Network wants to create a home-and-mobile single point of access to satellite and terrestrial networks, but is having a rough time getting its hands on enough wireless spectrum to make it happen.

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Shares of Dish Network are up more than 4% on Wednesday afternoon at $47.55 in a 52-week range of $30.61 to $49.44.

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