DISH Tries to Bloody Sprint's Nose -- Again

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"When we think we're right, we're like a dog with a bone."

-- DISH Network Founder and Chairman Charlie Ergen

Given the above statement from the notoriously tenacious heart and soul of DISH Network (NASDAQ: DISH  ) , Sprint Nextel (NYSE: S  ) is not going to have an E-ZPass on the road to acquiring total control of Clearwire (UNKNOWN: CLWR.DL  ) -- hence, DISH's second attempt in two weeks to halt the merger.

Strike two
This latest attack comes in the form DISH's counteroffer for Clearwire. DISH's bid, worth $4.85 billion, works out to $3.30 a share, an 11% premium over Sprint's offer of $2.2 billion -- or $2.97 a share -- for the half of the company it didn't already own.

The DISH counteroffer gives even more ammunition to those Clearwire shareholders not pleased with the valuation of Sprint's offer. Even before Clearwire's board of directors agreed to Sprint's terms, two major Clearwire investors, Crest Financial and Mount Kellett Capital Management, expressed their disdain for the rumored buyout.

Crest Financial, owner of 8.3% of Clearwire, filed a lawsuit (link opens PDF) in December to stop any such sale, claiming Clearwire's spectrum would be worth much more to shareholders than a sale to Sprint.

Mount Kellett, holding 7.3% of Clearwire's shares, sent a letter in November to the company's board saying Clearwire's excess spectrum could "generate gross proceeds of $6 [billion]-$9 billion."

Strike one
DISH first tried to upend the Sprint-Clearwire merger by removing Sprint's source of spending money. That would be the Japanese mobile operator SoftBank, which agreed in October to buy a 70% slice of Sprint for $20 billion, $8 billion to be paid up front.

DISH appealed to the FCC for a three-week postponement of the deadline for receiving challenges to the Sprint-SoftBank deal. In its extension request, DISH raised the specter of a foreign company controlling a large amount of mobile spectrum. It also pointed out the combined spectrum of Sprint and Clearwire could have an anti-competitive effect.

That appeal -- which was also joined by Crest Financial -- was successful. The FCC moved back the deadline to file denial petitions to Jan. 28.

As the satellite TV business has peaked, Charlie Ergen has been focusing on DISH becoming a mobile communications provider. The Federal Communications Commission last month approved the DISH plan to build a 4G LTE network using spectrum previously reserved for satellites.

There is a "gotcha," though. For the DISH mobile network to use affordable handsets -- those without satellite chips -- it needs access to a ground-based LTE network, a very expensive bit of infrastructure to build from scratch.

That is why DISH is now making its bid for the network provider Clearwire, even though it's not Clearwire that DISH really wants, it's Sprint -- actually, access to Sprint's network.

Early last month, Bloomberg reported Sprint had approached DISH about joining forces. The proposal, according to Bloomberg's unnamed sources, would allow DISH to provide mobile communications service over the Sprint network. In return, Sprint would get access to DISH's spectrum. The two companies would either share DISH's mobile revenues, or Sprint would receive a fee from DISH.

That would have worked out for DISH by saving it the cost and bother of building its own ground-based mobile network. However, the Sprint-Clearwire deal has put such collaboration out of reach.

The reality
DISH's unsolicited proposal to Clearwire is non-binding and subject to certain conditions. Those include buying some of Clearwire's spectrum, acquiring at least 25% of Clearwire's common stock -- up to all of it -- for the $3.30 share price, and help with financing the deal, according to Clearwire's statement.

Clearwire also said its "ability to enter into strategic transactions is significantly limited by its current contractual arrangements, including the Sprint Agreement."

So what does that mean?

Compared to Sprint's offer, DISH's proposal appears somewhat tenuous. The Sprint deal at least offers Clearwire a penalty fee worth $120 million to $220 million if their deal is terminated. DISH, on the other hand, could yank its proposal away like Lucy once again pulling the football away from Charlie Brown.

Charlie Ergen likes to play rough and this may just be him swinging sharp elbows to let people know DISH is going to get in the mobile business one way or another.

Or it may just be his way of paying back Sprint for teasing DISH with its purported proposal -- or for opposing DISH's satellite spectrum plan during the FCC's review period. Or all three.

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