Dish's $25.5 Billion Offer for Sprint Is All About Cord-Cutting
Dish is willing to pay $25.5 billion for Sprint because it thinks the wireless high-speed Internet Sprint can offer is the future of streaming TV. If the deal goes through, the satellite provider would offer Internet delivered wirelessly from Sprint cellphone towers to a rooftop antenna, Dish Chairman Charles Ergan told The Wall Street Journal's Shalini Ramachandran and Anton Troianovski. So instead of losing customers as they make the inevitable shift from bundles of television to streaming, Dish can ensure it controls the tubes for the new mode of consumption. Like Comcast, and other pay TV entities that also sell Internet, Dish would like to have something to gain from the shifting viewing trends.
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Dish more than other pay-television companies has its eye on the future. Ergen before has said he already thinks people are cutting the cord. So, it's being proactive. Ideally Dish would like to hook people to pay TV early, he said in that same interview. That's where innovations like the Dish Hopper—which allows consumers to skip over commercials completely—come in. But, he ultimately knows that television watching is heading to the Internet, a la carte style, he said during an AllThingsD interview. "The Internet is really a la carte today," he said. "That's ultimately where we have to compete." What better way to compete than getting people to pay his company to serve them the very Internet that runs that online video.
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In addition, Ergan wants Sprint for his TV Everywhere vision. In an ideal world, Dish's customers can access its content from any device, anywhere. In order to do that, people need a wireless or data connection. It tried to buy up ClearWire to get just that. But, it ran into a lot of contractual problems. Sprint, on the other hand, can offer that without the issues. Again, if Dish owns those waves, it can get you to pay into its system twice. It not only owns the cable you're watching, but the wireless network, too.
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While this is a perfect set-up for Dish, it's unclear if Sprint wants the deal. The offer came unsolicited as a counter offer to Softbank's. Dish would only have to pay a $600 million breakup fee, which Ergan said he was willing to pay.
