Dish Says Can't Outbid AT&T for DirecTV
Dish Network Chairman Charlie Ergen says he sees a lot of sense in merging with satellite television rival DirecTV, but doesn't think he can outbid AT&T Inc.
The comments came in a freewheeling conference call Thursday with Wall Street analysts and reporters. The purpose of the call was to discuss Dish's first quarter results, but that was overshadowed by the satellite broadcaster's position near the center of a lot of merger speculation in the telecom industry.
Earlier, Dish said first-quarter profit fell 18% as the satellite-television provider's higher expenses offset a rise in revenue.
Dish's 14 million pay-television subscribers and big holdings of wireless spectrum amassed in recent years make it a logical partner for a number of companies, including rival DirecTV and big telcos like AT&T and Verizon, or smaller wireless companies like T-Mobile US Inc. On the call, Mr. Ergen made clear he's a willing participant in virtually all of those scenarios, but said he doesn't want to overpay.
"We don't have the kind of money to outbid, you know, Sprint for T-Mobile or outbid AT&T for DirecTV," Mr. Ergen said.
Dish said its first-quarter profit fell to $176 million, as expenses offset better revenue, which rose 6.5% to $3.59 billion. The company added 40,000 pay-TV subscribers and 53,000 broadband customers in the quarter.
AT&T has approached DirecTV about a takeover and the two companies are in talks, people familiar with the matter have said. In addition, Sprint is pursuing a merger with T-Mobile, though opposition from regulators poses a hurdle. The deal-making is occurring against the backdrop of Comcast Corp.'s$45 billion agreement to buy Time Warner Cable, which will create a giant in the pay-TV and broadband markets, as well as possibly a new entrant into wireless.
Dish would consider deals with either target, but only if their suitors drop out, he said. "We don't mind getting in a battle we've got to shot to win, but we have no shot," Mr. Ergen said.
DirecTV has long been seen as a natural merger partner for Dish. The two tried to do a deal more than a decade ago, but were shot down by regulators. Mr. Ergen said Thursday he thinks a deal could win approval now, especially as the Comcast deal changes the competitive landscape.
If would make strategic sense to try such a merger now, while regulators are considering the cable deal, he said. Dish would evaluate a deal, but DirecTV's current "frothy" valuation--its shares are up more than 20% so far this year--would be a "non-starter," he said.
AT&T could pay more than $100 a share for DirecTV and still find it financially attractive, Mr. Ergen said. The Dish chairman also said buying his company would "make a lot of sense" to companies like AT&T or Verizon.
Dish has spent years building up a cache of wireless spectrum that is worth billions of dollars. Now, Mr. Ergen said, we're "ready to harvest."
Dish posted earnings of $175.9 million, or 38 cents a share, down from $215.6 million, or 47 cents a share, a year earlier.
Analysts polled by Thomson Reuters had projected earnings of 44 cents a share and revenue of $3.58 billion.
Dish, which has struggled to boost its subscriber numbers, added 40,000 net pay-TV subscribers, versus a net gain of 36,000 during the same period a year earlier. The company ended the period with about 14.1 million pay-TV subscribers, nearly flat from a year earlier.
The company also added about 53,000 net broadband subscribers in the quarter, versus additions of 66,000 in the previous year's quarter.
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(END) Dow Jones Newswires 05-08-140725ET Copyright (c) 2014 Dow Jones & Company, Inc.