Dish (NASDAQ: DISH) co-founder and chairman Charlie Ergen has long used the so-called "Seinfeld strategy." On an earnings call in May 2011, Ergen responded to an analyst who was trying to make sense of Dish's seemingly eclectic mixed bag of assets by saying that his strategy was like an episode of the TV show Seinfeld - seemingly random scenes that all "came together in the last couple of minutes." The list of Dish's assets at the time included Blockbuster stores purchased out of bankruptcy, Slingbox streaming devices, and wireless spectrum, along with Dish's core satellite TV business.
Flash forward to 2018, and nothing has come together. Investors are now worried over the lack of news regarding the company owing to Ergen's evasiveness. AT&T Inc. (NYSE: T), the parent of Dish's closest rival, DirecTV, is turning into a powerful media conglomerate through its recent takeover of Time Warner (NYSE: TWX). T-Mobile US Inc. (NASDAQ: TMUS) and Sprint Corp. (NYSE: S) - both previously and unsuccessfully targeted by Ergen - are also trying to merge, at the same time that Walt Disney Co. (NYSE: DIS) and Comcast Corp. (NASDAQ: CMCSA) are pursuing 21st Century Fox Inc. (NASDAQ: FOXA). Comcast competes with Dish in providing pay-TV services, while its NBCUniversal unit, along with Disney and Fox, own the networks that Dish pays to carry.
Over the last few years, Ergen has spent nearly $20 billion buying up unused spectrum - the radio frequencies that telecommunications companies use to build wireless networks - accumulating more than $15 billion in debt on Dish's balance sheet, or more than seven times its cash position. Ergen, who stepped down as CEO in December to "devote more attention to the company's emerging wireless business," remains chairman and owns about half of the company's shares, wants to use this spectrum build a 5G wireless network that can compete with AT&T, Verizon, and a possible Sprint-T-Mobile combination.
That said, Sling TV is an important but overlooked asset within Dish. It was a maverick in TV streaming, though competition has become intense as there are lower barriers to entry. It's also extremely easy for consumers to cancel such services versus the headache of dropping cable. AT&T copied Dish's Sling TV by recently raising the cost of its cheapest DirecTV Now package by $5 a month, as both companies vie for the miniscule margins offered by internet streaming services. I could still see a buyer being drawn to Sling, and I wouldn't count out a deal between Dish and Verizon Communications Inc., which could really use its spectrum.
"A multi-billionaire is risking everything to recapture the entrepreneurial glories of his early days in satellite TV," said analyst Craig Moffett, a longtime industry analyst covering telecom stocks. "To succeed, our protagonist will have to navigate a murderers' row of cord-cutting, groaning debt obligations, and an FCC buildout requirement that could render some of his most precious assets worthless."