AT&T and DirecTV Merger: Dish Network Tried Too
Looks like DirecTV is one hot commodity on the telecommunications block. Recent documents show Dish Network was interested in purchasing DirecTV and that talks stopped only this year in light of AT&T's offer.
In a Securities and Exchange Commission (SEC) document filed by AT&T on Tuesday, DirecTV outlined the details leading up to the $49 billion deal between the companies. The SEC document shows DirecTV was in talks with rival Dish Network until May, when Dallas-based AT&T made an offer that could not be beat.
Dish Network Chairman Charlie Ergen had reportedly approached DirecTV at least twice since 2011 and was interested in combining the companies. Ergen and Dish Network ultimately conceded that the merger was a "nonstarter" thanks to share prices, that DirecTV's price was too "frothy," and that they could not compete with AT&T's pockets.
Dish Network lags behind DirecTV, with around 14 million satellite TV subscribers.
Dish Network is never named directly in the parts of the SEC filing that detail the competitor talks, but is instead referred to as "Company A," a competitor to DirecTV with spectrum holdings. It's not too hard to guess which company that is.
This isn't the first time Ergen and Dish Network have lost out on buying a company to another. As The Wall Street Journal puts it, Ergen and Dish seem to be "always a groomsman, never the groom." In the last two years, Ergen has pursued MetroPCS, Clearwire and Sprint. MetroPCS went to T-Mobile, and Clearwire went to Sprint, which was then bought by Japan-based SoftBank Corp.
"We gave it our best shot to get it, and sometimes your best isn't good enough," Ergen said in August about the Sprint and Clearwire fiascos.
The moves highlight Dish Network's strategy: expanding beyond simply providing television to consumers and growing into a telecommunications firm. Dish Network holds billions of dollars in spectrum assets but cannot implement them. The company either has to acquire a wireless service provider or strike deals with existing companies. So far, the first route has failed.
Reports in early May said Dish Network could swoop in between Sprint and T-Mobile, which are flirting with a merger.
"We don't have the kind of money to go outbid Sprint for T-Mobile or outbid AT&T for DirecTV. So we have to be well-positioned so, no matter what happens, it's all good for us, and I think we're there," Ergen said during a first-quarter earnings report conference call.
"I wasn't a very good poker player, but when a bunch of drunken fools were throwing money around, occasionally I was able to pick up the pot at the end of the day," Ergen said. "My recommendation to our board would probably be let's see what happens."
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