Despite another rejection last month of its last attempt to pull the plug on Dish Network’s Hopper, 21st Century Fox is stepping back into the legal fray in its battle against the ad-jumping DVR service. The broadcaster filed a brief with the Ninth Circuit Court of Appeals earlier this week requesting a brand new review of the July 24 ruling to be heard by all the court’s judges. The previous ruling shut down Fox’s aim for an injunction against the Hopper. Perhaps more importantly, the panel from the Ninth Circuit also said that the provider itself was not infringing on copyright because the services’ users are actually the ones making copies of the programming in question and that’s OK under fair use. For Fox, that was an error and raised the stakes even higher. “The panel announced two unprecedented rules of law that threaten the creation and licensing of television shows, movies, books, software, or other copyrighted content,” said the August 7 filing.
Investors are becoming so obsessed with the idea of a DirecTV-Dish Network merger that it seems to be just a matter of time before the companies succumb. Questions about the possibility kept popping up in Dish Network’s quarterly earnings call yesterday. Company watchers “seem to be fixated” on the subject, Brean Capital’s Todd Mitchell says. And execs don’t seem to mind. Last week DirecTV CEO Michael White said he’d “never say never.” And Evercore Partners’ Bryan Kraft says he has “never heard [Dish Network Chairman Charlie Ergen] speak as openly and positively regarding the possibility of a combination with DirecTV” as he did yesterday. The FCC blocked a satellite TV merger in 2002 on the grounds that it would leave many rural subscribers, who don’t have cable, with just one pay TV provider. But Ergen says that the business is “materially different” than it was then. Verizon FiOS and AT&T U-verse serve many markets. “And then of course, you have almost an unlimited number of people now on digital Internet getting into the business, whether it be from Netflix to Hulu to Amazon to everything else that you can do on the Internet,” Ergen says. “And that’s only going to grow.” Later he added that “there’s not any question that putting Dish and DirecTV together makes a lot of sense…. If you just wanted to create short-term value, that would be probably your No. 1 option.”
This was a lousy day for DirecTV after it reported lower-than-expected earnings, with especially weak results in Latin America. But CEO Michael White gave investors at least one reason to stick with the company: He signaled in a call with analysts that he’d be receptive to the idea of …
The tug of war over wireless broadband provider Clearwire just became more interesting, and precarious for Dish Network. Sprint has raised its offer for the 50% of Clearwire it doesn’t already own to $5 a share — valuing the wireless broadband company at more than $14B — which tops Dish Network’s $4.40 a share bid. That led Clearwire’s board today to switch sides: It now recommends that shareholders support Sprint instead of Dish. They’ll have a chance to vote on July 8 following the company’s decision to postpone a June 24 special meeting. “The amended agreement with Sprint clearly acknowledges the significant value present in Clearwire – from our deep portfolio of wireless spectrum to the tremendous amount of progress the Clearwire team has made in improving our operations and beginning the construction of our next-generation 4G LTE network,” CEO Erik Prusch says. In addition, shareholders owning about 9% of Clearwire have said that they’ll support Sprint. Between these investors — and others including Comcast and Intel who’ve supported the wireless phone company — Sprint believes that a majority of independent shareholders will support it over Dish. If they don’t, then Clearwire must pay Sprint a $115M break-up fee.
The satellite company says that it was hit by several factors including the effects of a price increase, rising programming costs, and the continued downturn at Blockbuster. Dish ended up with Q1 net income of $210.7M, -41.5% vs the period last year, on revenues of $3.56B, -7.4%. Analysts thought revenues would come closer to $3.61B. And earnings at 47 cents a share were 6 cents short of the consensus forecast. The company ended the quarter with 14.1M subscribers, +36,000 vs an increase in last year’s Q1 of 104,000. Dish says it was hurt by a rate hike which it did not have last year. The deconsolidation of Blockbuster UK and closing of U.S. storefronts resulted in a 46% drop in the operation’s revenues to $180M, while operating income fell to $1M from $14M. It had about 650 domestic stores at the end of March, down 150 in the quarter, and says it will close another 150 this quarter. In the satellite business, the February price increase contributed to a 3% rise in the average revenue per subscriber to $78.54 a month.
In a move that could potentially thwart SoftBank’s proposed $20B acquisition of 70% of Sprint Nextel, Dish Network has made an unsolicited $25.5B offer for the U.S. number three mobile services provider. Dish chairman Charlie Ergen said today that his company’s cash and stock bid is “a superior alternative to the pending SoftBank proposal.” Ergen, who has been amassing spectrum rights to launch his own wireless broadband network, also addressed the Clearwire situation. In October 2012, Sprint had begun negotiating to gain control of the portion of Clearwire it does not alredy own, in a deal that was seen as crucial to Softbank’s planned acquisition of Sprint. In January, Dish made an unsolicited bid for the wireless communications company. In a statement today, Ergen said, “Though not a condition of our proposal, we anticipate that the pending transaction with Clearwire would be completed.” Sprint shares were up in pre-market trading. The full Dish announcement is below:
DISH Network Corporation (NASDAQ: DISH) today announced that it has submitted a merger proposal to the Board of Directors of Sprint Nextel Corporation (NYSE: S) for a total cash and stock consideration of $25.5 billion. The DISH proposal clearly represents superior value to Sprint shareholders, including greater ownership in a combined company that is better positioned for the future with more spectrum, products, subscribers, financial scale and new opportunities.
The cable operator will pocket $525M and AMC Networks will end up with $175M the companies said today in an SEC filing. This was the last big question remaining after Dish Network agreed in October to pay $700M …
This is a nightmare scenario for broadcasters, although it appears from The Wall Street Journal’s report this morning that no deals are imminent. The story says that Aereo — the controversial Barry Diller-backed service that streams broadcasters’ over-the-air signals to its subscribers — has been chatting with companies including Dish Network and AT&T about potential package deals. Citing “people familiar with the matter,” the story says AT&T could offer broadband customers a deal that includes Aereo’s TV programming. Dish also could use Aereo as part of a small and low-cost package of channels that it would stream to subscribers. These ideas likely won’t move beyond the talking stage as long as broadcasters — including all of the leading networks — are asking the courts to rule that Aereo infringes on their copyrights. They say it appropriates their programming without their permission, and without paying them a dime. Aereo counters that it merely streams local signals that broadcasters already provide for free to anyone who has an antenna.
Here’s something you rarely see in Big Media: Dish Network — one of the industry’s most frugal companies when it comes to executive compensation — cut the outlays for most top execs, with CEO …