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Chinese take out: Dish Network gets nasty with foreign suitor for Sprint Nextel
Dish Network gets nasty over suitor with ties to China
The Dish advertisements openly liken a potential Sprint-SoftBank merger to the Dubai deal. In a statement late last week, Dish general counsel Stanton Dodge said the steps that SoftBank has taken to reassure the government only “confirm the serious national security risks of SoftBank acquiring Sprint and its wireless and wireline assets of national strategic importance.”
“We remain concerned, however, that these reported steps do not adequately protect our national security interests, especially with respect to Sprint’s critical fiber backbone network and Sprint’s extensive contracts to provide important telecommunications services for government, law enforcement and defense customers,” Mr. Dodge said.
In a May 21 hearing on cybersecurity before the House Energy and Commerce subcommittee on communications and technology, Stewart A. Baker from Steptoe & Johnson, a law firm representing Dish Network, said the government does not have much regulation authority over products in the telecom industry unless a foreign buyer purchases a U.S. company.
“It is an odd [set] of incentives for the U.S. government in which they might actually have more regulatory authority if they let the transaction go through,” Mr. Baker said about the Sprint-SoftBank deal.
When foreign ownership of a company is to exceed 25 percent, the FCC gives additional review and scrutiny of the transaction’s impact on public interest. The Justice Department and the Committee on Foreign Investment in the United States (CFIUS), an interagency committee that reviews transactions involving foreign ownership of U.S. businesses, are also reviewing the SoftBank deal to ensure national security is not affected. Dish, as a U.S.-based enterprise, would not be subject to a CFIUS review.
Shareholder meeting set
The lobbying comes as Sprint shareholders are set to gather June 12 to consider the SoftBank offer.
Analysts say a SoftBank merger could give Sprint the experience and financial ability to compete with AT&T and Verizon Wireless, while a Dish merger would combine the television and wireless industries into one U.S.-based company.
If Sprint decides to close the deal with Dish, it will be forced to pay a $600 million break-up fee to SoftBank, an amount that Dish executives argue will be made up through the higher premium it is offering.
Sprint formed a special committee last month to evaluate Dish’s offer but asked the FCC to keep its review of the Sprint-SoftBank deal on track for approval.
Dish Network’s hardball tactics have faced some criticism in the trade press. Dish’s $25.5 billion takeover bid came six months after the Sprint-SoftBank deal was announced, and raising national security concerns so late in the process “feels like a desperate act,” wrote Gina Chon, who covers the industry for the tech news website Quartz (qz.com).
“If CFIUS and the FCC give the green light to SoftBank,” she added, “it will be up to Sprint investors to decide which offer they prefer, and the main things they will care about [are] deal certainty and price.”
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