Was DISH CEO Ergen the Key to the Court’s Pro-Merger Decision?


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UPDATE While there were a lot of moving parts and players in Tuesday’s court ruling against states blocking the T-Mobile-Sprint merger, the New York Post reports that DISH CEO Charlie Ergen may have had a bigger role than anyone knew. Ergen, a billionaire, may have been able to convince U.S. District Judge Victor Marrero that his satellite dish-grown company could fill the bill as the fourth major wireless carrier post-merger.

Judge Marrero acknowledged DISH in his ruling stating:

“Finally, the FCC and DOJ have closely scrutinized this transaction and expended considerable energy and resources to arrange the entry of DISH as a fourth nationwide competitor. DISH’s statements at trial persuaded the Court that the new firm will take advantage of its opportunity, aggressively competing in the RMWTS Markets to the benefit of price-conscious consumers and opening for consumers to use a broad range of spectrum that had heretofore remained fallow.” (our emphasis) 

Ergen testified in front of the same court in December of last year, fighting what he felt was a mis-information campaign against his company that was casting doubt on DISH’s capacity to be a major carrier. “People are pretty sneaky and talk to reporters and analysts, but it is not true,” he told Judge Marrero. “It’s always part of a campaign to cast doubt on a new entrant.” 

Marrero cited “evidence of the currently confidential and creative strategic partnerships that Dish is planning,” calling the company “a disruptive maverick” that would offer “low prices for innovative and high-quality services.”

The Post reported that Ergen also convinced the judge he had strategic partners behind him although only gave Marrero those details in a private meeting. Ergen could potentially sell up to 50 percent of his projected wireless network to partners, according to the Department of Justice’s antitrust chief Makan Delrahim.

T-Mobile sold Boost Mobile to DISH to get DOJ merger approval under the proviso that DISH could only parcel out five percent of the company to strategic partners. The DOJ ruled, in order to create a fourth carrier, DISH needed to allow partners to play a bigger role and raised the bar to 50 percent…provided it wasn’t AT&T, Verizon or Comcast (i.e., T-Mobile and Sprint competitors).

Well-heeled partners will no doubt be needed as Ergen said it will take $10-to-15 billion to build that fourth cellular network, a sum that is beyond the reach of almost all financial institutions, but not beyond the likes of Google or Amazon. Both denied talking to Ergen, according to the Post

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