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Dish Still Has Options on its Plate

NEW YORK ( TheStreet) -- In a surprise move Friday, Dish Network (DISH - Get Report) 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 - Get Report) and Amazon's (AMZN) Prime. And the sector is getting more crowded with Apple's (AAPL - Get Report) iTV and possibly Intel (INTC - Get Report).

What's more, Dish remains in a battle with DirecTV (DTV - Get Report). 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.
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