With its proposed deal to acquire Sprint Nextel for $25.5 billion, Dish Network wants to give consumers more -- for the same money. Sounds like a good deal. But who would really pay?
Dish Chairman Charlie Ergen believes the combination of two companies -- Dish, for TV distribution, and Sprint, for the mobile wireless business -- would significantly grow their total bandwidth to rival AT&T and Verizon.
Analysts believe Dish is now limited in traditional video distribution, and that adding mobile phone service would give the company a new business where consumers can access media and content across a number of devices.
For some time, analysts have been speculating -- including talk of a possible merger with DirecTV – about what Dish would do with the loads of cash it has accumulated. Both Dish and DirecTV lack mobile phone assets, as do many large cable operators.
Dish has already been a thorn in the side of TV show creators through threatened and actual station and network blackouts caused by the price Dish will pay for programming. More urgently, the broadcast networks are worried over the Dish’s Hopper set-top box device that allows for mass skipping of their prime-time commercials.
Consumers would be happy with the Sprint purchase, says Dish. "Someone who gives you more than 2 [gigabytes] for the same money, that's attractive," said Thomas Cullen, Dish executive vp of corporate development of Dish. "Nobody is going to have a bigger pipe than Dish-Sprint." The proposed deal could give customers 50 gigabytes.
All this comes on top of potential news that Dish is thinking about forming some sort of deal with renegade TV distributor Aereo.
What Dish would gain with the Sprint Nextel deal, of course, is higher leverage over those already hard-pressed TV content providers. Specifically Dish would gain in the one area many media executives -- traditional, digital, and otherwise -- know is coming: an aggressive rise of all media on mobile platforms.
Dish has money. And given its current low growth projections, moving to secure another key piece of consumers’ communications needs is prudent. Keeping costs down will be a key in giving those consumers more for their money. Where will that come from? We can make a logical guess.