Please ensure Javascript is enabled for purposes of website accessibility

Is DISH Building the Perfect Beast?

By Anders Bylund – Updated Apr 6, 2017 at 8:49PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

What kind of Frankenstein company is DISH trying to create?

When DISH Network (Nasdaq: DISH) and sister company EchoStar (Nasdaq: SATS) won the auction for Blockbuster's assets, DISH CEO Charlie Ergen didn't seem sure what he wanted to do with the company. "We think there might be synergies back with DISH Network's business. We're not sure yet," he told analysts in the ensuing earnings call. And just like a meandering Seinfeld episode, the overarching strategy just couldn’t be explained: "You'll have to just wait and see where it all comes together. It's a little hard to explain it this early in the show."

Since then, DISH has gone on a veritable buying rampage in the bargain bin. Courts are reportedly going to approve the $1.4 billion buyout of bankrupt satellite operator DBSD, and the company is spending another $1.4 billion on bankrupt satellite phone service TerreStar Networks.

Both the DBSD and TerreStar buyouts come with generous helpings of wireless bandwidth licenses, possibly opening the way for DISH to start some sort of terrestrial communications or broadcasting network. Slap the Blockbuster brand on a video service over the radio waves, perhaps akin to the now-defunct  MovieBeam service that was launched and then abandoned by Walt Disney (NYSE: DIS), and you might get a Frankenservice that makes sense. No guarantees, but there's a chance.

Bloomberg reports of a potential bidding war over DVR veteran TiVo (Nasdaq: TIVO), featuring the wits and wallets of Google (Nasdaq: GOOG), Microsoft (Nasdaq: MSFT), and Rovi (Nasdaq: ROVI), now that the company won a long-fought patent war with DISH.

In my opinion, it’s possible that DISH could get involved in the bidding as well. Heck, DISH could have an unfair advantage in the negotiations. Simply buying TiVo would obviate the need to pay out some $500 million of a court settlement over TiVo's DVR patents, so the effective cost of any deal would be lower for DISH than for the others.

Then again, DISH would be cutting it tight on cash. With only $3.4 billion of cash on hand versus $6.5 billion of debt, DISH would have to tap new debt or launch a stock-based offer to cover some of the expected $2.4 billion price tag for TiVo.

Has Ergen figured out how to build his Frankenstein of a media business yet? When will he tell his shareholders about it? Add DISH to your Foolish watchlist to keep a close eye on the company. When Ergen completes his beastly plans, you'll be the first to know. In the meantime, feel free to speculate on his plans in the comments section below.

Fool contributor Anders Bylund owns shares of TiVo and Google, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Microsoft and Google. Motley Fool newsletter services have recommended buying shares of Walt Disney, Microsoft, and Google and creating a diagonal call position in Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$97.45 (-1.96%) $-1.95
Microsoft Corporation Stock Quote
Microsoft Corporation
MSFT
$237.50 (-1.48%) $-3.57
Alphabet Inc. Stock Quote
Alphabet Inc.
GOOGL
$97.42 (-2.63%) $-2.63
DISH Network Corporation Stock Quote
DISH Network Corporation
DISH
$14.14 (-4.59%) $0.68
TiVo Corporation Stock Quote
TiVo Corporation
TIVO
EchoStar Corporation Stock Quote
EchoStar Corporation
SATS
$16.52 (-1.73%) $0.29

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
104%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.