In his years as a satellite-TV pioneer, Charles Ergen has rarely shied away from a fight. The CEO of Dish Network kicked up a corporate storm today with a $25.5 billion bid to buy Sprint Nextel. Ergen compared the bid to an episode of "Seinfeld": a seemingly random series of events that ties together in the end.
After all, Dish is a TV company and Sprint is in the phone business. Still, Scott Cleland, president of telecom research firm, Precursor, says the deal makes sense. "It would make both companies stronger," he notes. Cleland says Ergen is hungry for more broadband capacity and Sprint has a lot of it. "He sees an opportunity to have a bundled offering of satellite TV and wireless broadband and voice service."
That's the triple threat. AT&T and Verizon have a head start in that department, but acquiring Sprint could make Dish a contender.
"By combining the two companies, they get a scale close to an AT&T and a and diversify and expand their business," says telecom industry consultant, Chetan Sharma. The Sprint deal could allow Dish to stay nimble at a time when the industry is in flux. Sharma says no one knows how we’ll be consuming media in five years, but we do know it will involve wireless.
There are potential bumps in the road. Sprint is in the middle of a buy-out deal with Japanese company, Softbank. But Cleland says Ergen can't be counted out.
"He's pretty much the shrewdest CEO out there," he says. "He's built a company from nothing by playing his poker chips very well.
In addition to being a Seinfeld fan, Ergen was a professional poker player.