May 8, 2014 / 9:37 PM / 5 years ago

Dish Network says cannot afford to bid against rivals for DirecTV, T-Mobile

(Reuters) - Dish Network Corp (DISH.O) Chairman Charlie Ergen said on Thursday he wanted to avoid pricy bidding wars with deep-pocketed rivals for targets such as T-Mobile and DirecTV, even if they could help the satellite television operator.

A DirecTV dish is seen outside a home in the Queens borough of New York July 29, 2013. REUTERS/Shannon Stapleton

Merger speculation in the pay-TV and telecommunications industries has heated up in the past few months, with Comcast Corp’s (CMCSA.O) proposed $45 billion takeover of Time Warner Cable Inc TWC.N and DirecTV’s DTV.O reported talks with AT&T about a sale.

Sprint Corp (S.N), controlled by Softbank Corp’s (9984.T) Masayoshi Son, has also made no secret of its interest in T-Mobile US Inc TMUS.N, which some bankers have floated as a potential target for Dish as well.

When asked on a conference call about Dish’s merger options, Ergen said the company, which attempted to buy DirecTV more than a decade ago, would not make a new approach at its current price, even though a tie-up would provide lots of synergies.

“(DirecTV) looks to be too frothy, but it could make a lot of sense for an AT&T or Verizon, or somebody else who has a different motivation,” he said.

Shares of Dish and DirecTV each closed 4 percent lower on Thursday following the comments.

Unlike DirecTV, Dish has amassed billions in wireless airwaves over the past few years under Ergen. He may have suffered a setback on one of his wireless investments on Thursday, when a U.S. bankruptcy judge ruled that his $1 billion debt in the LightSquared bankruptcy should be subordinated and questioned Ergen’s credibility.


Ergen said Dish was not in a position to outbid Sprint should it make a move for smaller rival T-Mobile but if Sprint does not proceed, T-Mobile, which is majority-owned by Deutsche Telekom (DTEGn.DE) would be of “strategic interest” to Dish.

Deutsche Telekom Chief Executive Officer Tim Hoettges reiterated on Thursday he would be in favor of building a stronger third player in the U.S. market through a merger, but said U.S. regulators don’t appear to want one.

As the U.S. pay-TV market matures, Dish has been developing an Internet-based TV product and has reached a programming agreement with Disney and is in talks with other media companies.

The upcoming service is being closely watched because it would mark the first time a big operator unveiled a purely web-based service outside of a traditional TV subscription.

“We have enough programming contracts to launch this service now, but we don’t anticipate we would launch before the end of the year,” Ergen said.

Earlier Thursday, Dish reported a better-than-expected 6 percent rise in quarterly revenue due to gains in net subscribers.

Additional reporting by Nicola Leske; Editing by David Gregorio and Jeffrey Benkoe

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