Dish boss plays weak patriotic card for Sprint

Charlie Ergen was apparently “disappointed” by Masayoshi Son, SoftBank’s boss, when he made jibes about the credibility of Dish Network’s takeover bid for Sprint. In an interview with USA Today, referring to Son’s remarks at SoftBank’s full-year earnings call on 26 April, the Dish chairman said “it was more [about] personal attack and personality than it was about business”.

Yet there appears little justification for Ergen to get hot under the collar about personal attacks, not least because Son had plenty of “business numbers” in his arguments about why he believes SoftBank’s bid for Sprint is better value than Dish’s.

OK, so Son accused him of “big-mouthing” and that the Dish offer was “incomplete and illusory”. And horror of horrors, the SoftBank boss even had the temerity to call Ergen a mobile industry amateur.

But in the rough and tumble world of business, this all seems pretty harmless. And Ergen himself, rather unwisely, admitted in a conference call on 15 April that he was not an expert on Sprint’s Network Vision. Son was simply pointing that out with his “amateur” dig.

Where Ergen goes really wrong, though, is when he plays the patriotic card. Again, according to the USA Today interview, he said: “We are an American company, and the modernisation of Sprint’s network will have to be done from the US. You have to climb the towers here, and you’ll have to have US employees who speak English. Operations command control will be in America. That’s good for jobs. It doesn’t mean that the other guys are bad. It’s just that we have an advantage.”

For one thing, Ergen’s argument looks weak and desperate. Up until now, the fight for Sprint has pretty much focused on the numbers and what may or may not be the best deal for Sprint’s shareholders. Only if you think you might be losing that battle would you surely start waving the American flag.

More worryingly, patriotism can quickly turn into protectionism. We’ve already seen Chinese suppliers Huawei and ZTE effectively elbowed out of the US market on the grounds of national security. Without hard evidence, though, the suspicion will remain that it’s the aggressive pricing of Huawei and ZTE – and their ability to beat off competition – that really ruffles political feathers. There’s already a double standard of sorts when a blind eye is turned to western suppliers that source cheaper components made in China. Why does that not pose a security threat?

Of course, as Ergen hints at, cultural clashes between a Japanese firm and a US company are likely. It will not run smoothly from day one if SoftBank’s takeover bid for Sprint is successful. Then again, there’s bound to be cultural clashes between a satellite TV player and a mobile operator.

Ergen also mentions the importance of everyone speaking English. Yes, perhaps that would be ideal, but language barriers can be overcome. (Son made a point of speaking in English at the SoftBank earnings call.) The US Security and Exchanges Commission certainly doesn’t see any problem with SoftBank’s approach to Sprint, announcing on 2 May that it had approved the Japanese firm’s bid to secure 70 per cent of the US mobile operator.

The next important date in this saga is 12 June, when Sprint shareholders vote on the SoftBank offer. Before then, Ergen will need to rip apart Son’s claim that the SoftBank bid – once factors such as a faster schedule and lower debt are taken into consideration – represents a 21 per cent premium to Dish’s counter proposal (even though the satellite TV operator has put more money on the table). Flag waving is unlikely to be enough.

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