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25 July 2019

Dish signs TV death sentence with $5bn Boost mobile splurge

It appears Dish Network’s satellite TV business is as good as dead following reports a deal has been reached for the acquisition of Sprint’s Boost Mobile and spectrum assets for $5 billion all-in. Not only that, but the costs associated with buying and sustaining these legacy businesses means Dish probably can’t afford to build its promised 5G infrastructure unless it gets a helping hand.

If Bloomberg sources are bang on, Dish Network has agreed to pay $3.5 billion for spectrum and $1.5 billion for Sprint’s pre-paid mobile businesses, which creates a fourth major carrier while paving the way for T-Mobile and Sprint’s $26.5 billion mega merger. Terms of the deal state Dish is barred for three years from selling the acquired assets or giving control to a third party and people familiar with the matter claim the Department of Justice could greenlight T-Mobile’s Sprint merger as soon as close of play today (Thursday July 25).

The concern is that with AT&T’s TV businesses taking an absolute hammering in Q2 (see separate story in this issue), this bodes very badly for Dish Network which is due to file second quarter results in the coming weeks. Now with its financial commitment to prepaid mobile and spectrum assets, that leaves even less in the bank to support the struggling TV business and even less in the tank to persevere with the live streaming service Sling TV.

Dish Network and AT&T together accounted for over 70% of the 3.7 million subscriber losses from the top six US pay TV operators during Q1, which is expected to rise dramatically considering AT&T alone hemorrhaged nearly 1 million in the first quarter. While Dish lost 259,000 in Q1, it has experienced a relative slow downturn compared to AT&T’s accelerated decline. However, at a churn rate of around 200,000 a quarter, Dish is on target to slide under 9 million satellite TV subscribers by year end.

Bloomberg sources also report that Dish will receive a wholesale agreement lasting seven years to sell T-Mobile wireless services under the Dish brand – including a three-year service agreement from T-Mobile to provide operational support as prepaid customers transition to Dish.

Just a couple of weeks ago, AWS and Google were both in the frame, the latter through a tie-up with Dish Network which the search engine giant quickly denied and this week’s reports underscore the uncertainty of internet tech titans joining the mobile connectivity fray.

Google and AWS backing off and clearing the field for Dish may be as a result of the DoJ’s investigation into big tech which coincidentally launched this week. Google parent company Alphabet is being accused of manipulating search results to enhance advertising profits, while AWS parent company Amazon allegedly fudged its data collection and private label practices.

On the other side of the coin, the agreement with Dish Network creates a fourth mobile carrier to sustain some level of competition which almost certainly would have negatively impacted consumers had T-Mobile and Sprint been allowed to merge without concessions. But even with the sale of assets to Dish and resultant imminent DoJ approval (per reports), a group of state attorneys are vehemently opposing the merger between T-Mobile and Sprint – which they claim will trigger price hikes and harm competition regardless of any asset sale.