Dish exploring next steps as it awaits airwaves discount decision

Wed Aug 5, 2015 3:54pm EDT
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By Malathi Nayak and Lehar Maan

(Reuters) - Dish Network Corp (DISH.O: Quote) is figuring out next steps as it awaits a decision by U.S. regulators on its eligibility for a discount in a recent airwaves auction, executives said on Wednesday, after the company posted a significantly higher-than-expected quarterly profit.

Federal Communications Commission officials told Dish last month that a staff review of the auction, which ended in January, found Dish affiliates SNR and Northstar ineligible for $3.3 billion in small-business discounts.

Following the record-setting $45 billion auction, FCC officials reviewed $13.3 billion of winning bids by SNR and Northstar. A rejection of the discount would mean SNR and Northstar would have to pay $3.3 billion back to the FCC to keep the spectrum licenses they won in the auction.

If the FCC decides against Dish, Chief Executive Charlie Ergen said on a call with analysts, the company and its affiliates will be left with three options: filing a lawsuit, not paying the money and incurring a penalty, or paying back the discount.

"I don't know exactly whether you would pay and then sue or just sue," Ergen said. "I don't think we know until we see the order."

The satellite TV company said on Wednesday in a filing that if the FCC grants spectrum licenses to its affiliates, it might have to give "significant additional loans" to the two companies.

It's "too early to tell" whether Dish needs to raise extra capital, Ergen said.

Dish has been losing pay-TV subscribers as it tackles an industry-wide trend of viewers shifting to online video offerings by such rivals as Netflix Inc (NFLX.O: Quote).   Continued...

A Dish Network logo is seen on a satellite dish on a Brooklyn apartment building roof in New York June 4, 2015.   REUTERS/Brendan McDermid