DISH Network's Options Slimming

For DISH Network (NASDAQ: DISH  ) management (and investors, for that matter), the name of the game for a few years now has been spectrum acquisition and cozying up to big-time wireless network businesses. While the company, led by Chairman Charlie Ergen, has had some success in building out its portfolio of airwaves and navigating regulatory waters, its mergers and acquisitions efforts have hit snag after snag. As of this fall, the company had just a handful of choices -- a merger with T-Mobile, a sharing agreement with Sprint, a merger with satellite TV peer DIRECTV, or a buyout of the bankrupt LightSquared's spectrum. The last one seemed like a nearly guaranteed win with DISH's $2.2 billion offer. But as of today, LightSquared appears to be off the table.

So long and goodbye
DISH had an outstanding offer for LightSquared's spectrum, and consensus was that it would win the bidding. Yet, in another example of the typical M&A "It isn't until it is," private equity firm Centerbridge Partners entered the picture and reached a tentative deal to buy the company for $3.3 billion plus around $1.7 billion in outstanding debt, according to The Wall Street Journal.

This is a blow to DISH. The satellite provider put in the bid months ago with the idea that its $2.2 billion would be the opening call in an auction that was to be held this Wednesday. The auction never happened, and Centerbridge emerged the leading contender backed by even greater partners -- Fortress Investment Group (a former interested party until recently), Harbinger Capital, and JPMorgan Chase.

The deal, which is actually a bankruptcy reorganization instead of a simple buyout, is not finalized and is dependent on approval from the FCC.

Part of the appeal of DISH's offer, besides the $2.2 billion, was that LightSquared (and DISH) already had FCC approval to build out a wireless network. This was the hurdle that led LightSquared to bankruptcy in the first place. Investors and analysts assumed, since the regulation hurdle was nonexistent for the DISH deal, that it would be the natural choice.

Cross another off the list
This isn't a game changer for DISH or its investors, but it's certainly a frustration. The company has invested billions in an effort to diversify away from the increasingly saturated pay-TV market in North America. Competitor DIRECTV is sourcing the majority of its growth in the largely open Latin American pay-TV market, but even that will mature in coming years.

DISH management is right to chase new lines of business, and wireless networks are only gaining more demand with smartphones and tablets in every hand. Now the pressure builds for the company to partner up with T-Mobile or (again) approach Sprint. DISH had previously tried to acquire the much larger Sprint, but it was mainly an effort to push through the Clearwire acquisition (also failed).

Investors will want to keep a close eye on this one, as the billions that have gone into the venture thus far need to yield returns. The stock depends on it.

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