NEW YORK ( TheStreet) -- In a surprise move Friday, Dish Network (DISH) said it won't continue its pursuit of Sprint (S), even though Chairman Charlie Ergen still had time to submit a new offer to block SoftBank's deal to buy Dish.
Ergen ended an eight-month drama, and may have ended Dish's interest in Clearwire (CLWR), which Sprint has been battling Dish to preserve.
Meanwhile, SoftBank, which last week increased its bid to buy Sprint to $21.6 billion, is the biggest winner here, especially since Sprint's attractiveness was due in part to its stake in Clearwire, which has valuable wireless spectrum.
SoftBank can now enter the U.S. wireless market. CEO Masayoshi Son says the Japanese wireless market has become saturated.The offer for Sprint, the third largest wireless carrier in the U.S., will be voted upon by shareholders on Tuesday. The deal would give SoftBank 80% of Sprint. Both sides feel that the deal could be closed as early as July. I don't see a scenario where it won't be approved, especially since Sprint's largest shareholder, Paulson & Co., supports the transaction. Last week, I described Ergen's maneuvering for Sprint and Clearwire as a manner of survival. Now Ergen is admitting that he couldn't keep up with SoftBank's seemingly endless ammunition. But nothing's changed. Ergen still needs to act. The satellite TV industry like cable, has limited upside. It is still under attack from the emergence of pay TV/entertainment outlets like Netflix (NFLX) and Amazon's (AMZN) Prime. And the sector is getting more crowded with Apple's (AAPL) iTV and possibly Intel (INTC). (DTV). Dish trades at a premium to DirecTV, even though DirecTV has done much better in metrics like revenue growth, gross margin and operating margin. The disparity between Dish's stock and that of DirecTV is more glaring with Dish's mobile broadband strategy now seemingly off the table. Dish investors are left to wonder what Ergen is going to do next to respond in these games of thrones. HBO would be proud.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV