Dish Network Corp. is in talks to merge with T-Mobile U.S. Inc., in a deal which, if completed, would be the latest in a wave of mergers between traditional cable networks and communications companies, according to a report from the Wall Street Journal.
Citing sources familiar with the matter, the Journal reported that the two sides were in agreement that a merged company would see Dish Network CEO Charlie Ergen as chairman and T-Mobile chief executive John Legere as CEO. T-Mobile has a market capitalization of about $31 billion, compared with Dish’s $33 billion. However, a purchase price and the mix of cash and stock that would be used to finance the deal remain unresolved, the Journal said.
A merger between the two companies would address various significant strategic issues facing both companies. T-Mobile has been growing largely by cutting prices, but that has resulted in its business becoming less profitable overall. Dish Network’s wireless licenses would allow the company to boost the capacity of its network, with a view to attracting more customers.
Dish Network's pay-TV business is eroding and it has no broadband business, which cable companies traditionally lean on to offset a declining TV business. Legere said in February that it made sense for T-Mobile, the fourth-largest wireless carrier, to team up with Dish Network, the second-largest satellite TV company in the U.S.
"Dish and we, that makes some sense," Legere told investors at Deutsche Telekom's capital markets day, Reuters reported. Deutsche Telekom owns about 66 percent of T-Mobile U.S.
Both companies have been looking for merger partners for years. T-Mobile previously tried to merge with Sprint, in a deal that was subsequently blocked by regulators, who want to maintain four wireless carriers in the U.S. market.
Other major players in both markets have been consolidating. T-Mobile's competitor, AT&T Inc is close to completing a deal to acquire Dish Network's rival DirecTV, which would create the largest pay-TV company in the U.S. Charter Communications, Inc announced plans late last month to merge with Time Warner Cable Inc and acquire Bright House Networks, creating the second-largest cable company in the country.
Dish has been attempting to innovate, as the Internet increasingly undercuts traditional TV company business models. Earlier this year, the company became the first U.S. cable provider to offer a package of TV channels -- dubbed Sling TV -- over the web. That service offered a $20 package of channels, including ESPN, but required users to subscribe to broadband from someone else.