Dish Network chairman Charlie Ergen, reaching back into his ample sack of poker metaphors, said that he would prefer to sit back and watch the current merger frenzy in the media business play out, noting that as a former professional card player he “learned to trust my cards.”
On a conference call with reporters after announcing strong Q1 earnings, Ergen said he didn’t have the firepower to outbid Sprint for T-Mobile or AT&T for DirecTV, citing two of the top rumored deals of the week, and would likely stick to the sidelines for the time being.
“When I used to play poker and everybody was throwing chips and betting crazy on the table, and I had really good cards, I always felt it was better to sit back and let them go at it,” Ergen said. “Every time they went at it, I’d learn something, and as I sat back they didn’t learn what I had. And I learned to trust my cards. 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 a pot at the end of the day.
“It’s crazy how eerily similar it seems to me today, with this crazy stuff in the press that everyone is going to go on wild swings in the market,” he continued. “My recommendation to my board will be probably to let’s see what all happens.”
Merger mania has swept the media industry over the past year, with several potential mergers speculated in the press. Over the past two weeks, Dish rival DirecTV has been said to entertain overtures from AT&T in a possible deal worth $40 billion. On a conference call with analysts to discuss first quarter results, Ergen said an AT&T/DirecTV merger could make economic sense, but stopped short of saying the deal would be a good one for AT&T.
“There certainly is economic rationale for an acquisition of DirecTV by AT&T, because I think it would be accretive even at a very high price, even materially higher than DTV is selling for today,” Ergen said.
Ergen said if reports are true that DirecTV has hired advisers to evaluate deals, it would behoove other companies to take a close look at the satellite giant.
“It probably makes a little less sense strategically,” Ergen said of an AT&T/DirecTV union. “They don’t buy you what you really need to probably compete with where the industry is going.”
That direction is an increasingly mobile one, Ergen believes and he pointed out that Dish has very attractive wireless assets that may get even more attractive once federal auctions for the AWS3 spectrum start up in the fall.
Ergen said that most analysts and investors miss that Dish has about the same amount of downlink spectrum as telecom giant Verizon, has two blocks of 20 Megahertz spectrum – which he called the LTE sweet spot – and that it has the same frequency nationwide..
“You’re going to get a pretty good market comparable in that auction for what our spectrum is worth,” Ergen said.
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