Spectrum kingpin Charlie Ergen may have run out of potential dance partners.
Ergen, the chairman of Dish Network, has been amassing billions of dollars of spectrum and planning to deliver digital video outside the pay-TV bundle — but with the just-announced $48.5 billion acquisition of DirecTV by AT&T, he could get left out of the fast-paced telecom deal-athon, some on Wall Street said Monday.
Craig Moffett, founder of research firm MoffettNathson, is one who thinks Ergen’s options are rapidly diminishing. Moffett on Monday downgraded Dish to sell.
“Dish Network has just been left standing,” Moffett told investors, some of whom had initially believed the AT&T bid for DirecTV was simply a way of getting Ergen to make his own move on the country’s No. 1 satellite-TV service.
“Dish Network hasn’t been so much ‘smoked out,’ as it has merely been … smoked. It loses both of its best exit options,” Moffett told investors in a note Monday.
Dish stock closed down about 1 percent, at $59.36. Other potential partners such as Verizon or Google seem more like “wishful thinking,” says the veteran telecom/pay-TV analyst.
Not everyone thinks Ergen is out of options, however.
Amy Yong of Macquarie Research issued a note Monday suggesting Dish could make a counteroffer for DirecTV at $120 per share, much higher than AT&T’s $95.
Such a bid seemed a long shot, given Ergen’s recent comments that DirecTV’s price had gotten too frothy for his taste.
A more likely scenario, according to Yong, is Dish getting together with Sprint, which has been eyeing a hook-up with rival T-Mobile — a merger that would have a hard time winning regulatory approval.
Even so, there’s bad blood between Sprint backer Masayoshi Son and Ergen. The two fought over ownership of Sprint with Softbank boss Son calling Ergen a big-mouth and Ergen appealing to American investors to shun the bid from Son’s Japan-headquartered bank.
Meanwhile, Paul Gallant, an analyst at Guggenheim Partners, says the AT&T/DirecTV get-together will make it harder for Sprint to execute its proposed takeover of T-Mobile, with regulators looking at a rapidly shrinking landscape.
Meanwhile, a second possible scenario for Dish emerged on Monday. Barclays analyst Jonathan Chaplin thinks a Dish-Verizon combination is the most likely outcome.