DISH Network (DISH) will soon be under new management. Or, actually, back under its old management. So why is DISH founder, majority owner, and current Chairman Charlie Ergen picking up the CEO reins again?

Current DISH CEO Joe Clayton will soon have more time for his family. Image source: DISH.

The news
 Current DISH CEO and President Joseph Clayton just announced his retirement from both posts and from the company's board of directors. He had held these positions since June 2011, taking over from Ergen as CEO and president. At the end of March, he'll give it all back to Ergen.

Ergen sends Clayton off with a strong letter of reference.

"Over the last four years, Joe's leadership has been instrumental to DISH as we have worked to engineer a fundamental transformation of our business," Ergen said in a prepared statement. "He has set the stage for what will become a new company, and with that he has prepared a new class of management to address the adventures coming our way.

The backstory
 When Clayton was first appointed CEO, Ergen said the new daily operations manager would "continue to deliver video entertainment into the future." In an interview with the Denver Post, Clayton clarified that he was stepping in to manage the integration of several large buyouts and let the chairman focus on long-term strategy.

"Charlie's never going to be disengaged, but he won't be burdened by having to worry about the day-to-day," Clayton told the newspaper. "He has a bigger role to play now than he ever had."

The buyout spree leading up to this separation of operations and strategy managers notably included bankrupt video rental legend Blockbuster. But it was also the beginning of DISH's adventures in wireless spectrum ownership via the acquisitions of bankrupt satellite telecoms DBSD and TerreStar.

Both of these defunct satellite communicators came with generous portfolios of land-based wireless spectrum licenses. The Federal Communications Commission has granted DISH policy waivers to use these acquired licenses in the so called AWS-4 band to run a land-based wireless network. The company has said that it wants to build an LTE Advanced network by 2016, resting on the DSBD and TerreStar signal blocks but buttressed with additional spectrum licenses.

Chairman Charlie Ergen will have less of it. Image source: DISH.

The present
 Clayton's background and expertise made him a great choice for integrating the puzzle pieces of Ergen's grand wireless ambitions. Among other career highlights, he had served as CEO of traditional telecom Frontier Communications (FTR) as well as a precursor to today's Sirius XM Holdings (SIRI 0.98%). That is hands-on experience from both sides of Ergen's satellite-plus-wireless vision.

But the stitching job is finished now, so Ergen won't be swamped by that brass-tacks business anymore. Instead, he'll be able to make sure his grand vision is steered in exactly the direction he always wanted.

The Blockbuster acquisition got all the glamor headlines in 2011, but the DBSD and TerreStar buyouts were far larger. The $320 million DISH paid for Blockbuster was actually just 10% of the company's total buyout budget in 2011. The satellite buyouts added up to $2.8 billion, at a time when DISH's market cap fluctuated around $12 billion. And Ergen always wanted these two companies for their beautiful wireless licenses.

When you're investing nearly one-quarter of your company's entire value into the beginnings of a brand new business, you can bet the new idea is important. There's no way Charlie Ergen would let Joe Clayton (or anyone else) take the credit for making it happen.

So here we are, with a new batch of wireless licenses acquired in the recent AWS-3 auction and arguably a fully formed business plan for DISH's upcoming LTE Advanced network. Expect Ergen to make another grand announcement in April, outlining his LTE plans in greater detail just as he sits down at the CEO desk again.

The takeaway
Here's the situation as I see it.

DISH Network is about to launch a high-speed wireless network, beaming out from traditional wireless towers and designed around the company's surprisingly rich collection of spectrum licenses. It won't compete with the likes of AT&T (T 1.10%) and Sprint (S) in the mobile communications market. Launching yet another cell phone service into an already congested market seems foolhardy, and I don't see how it would serve Ergen's plans.

Rather, I expect DISH to focus on an exclusive streaming media service. Based on next-generation wireless technologies and a solid spectrum position, the new network will have the muscle to support large numbers of high-quality video streams. This way, DISH can support its satellite TV service with a modern Internet add-on. This service will be more personalized, soaked in highly targeted (and therefore valuable) advertising, and able to perform some new tricks that require two-way data connections.

This was always a risky bet-the-farm move, and its success is far from guaranteed. But it's a bold new direction in an era that absolutely requires it, and perhaps DISH's best chance to stay relevant for the next decade or two. 

I don't own any DISH shares, but this market shift could impact some of my other holdings. In some cases, it's good news; elsewhere, it's new competition. That's why I'm following Ergen's every move like a hawk.