April 18, 2024

DealBook: SoftBank and Sprint Weigh Alternatives to a Deal

Masayoshi Son of SoftBank, left, and Dan Hesse, chief executive of Sprint Nextel, announced their companies' deal last October.Yoshikazu Tsuno/Agence France-Presse — Getty ImagesMasayoshi Son of SoftBank, left, and Dan Hesse, chief executive of Sprint Nextel, announced their companies’ deal last October.

Eight months ago, Sprint Nextel’s path to recovery seemed clear: a sale to SoftBank of Japan and a deal to buy full control of the wireless network operator Clearwire.

Now that road appears significantly muddier, only days before shareholders are scheduled to vote on the two transactions, leaving both Sprint and SoftBank to weigh backup plans.

Much of the confusion has arisen because of Dish Network, which has bid for both Sprint itself and for Clearwire. Nearly two weeks ago, Dish raised its offer for Clearwire to $4.40 a share, stirring doubt that Sprint can prevail at a Thursday vote with its current bid of $3.40 a share.

Sprint directors have been waiting for Dish to formalize a $25.5 billion takeover proposal for Sprint itself. If that appears, it would top SoftBank’s $20.1 billion bid.

Sprint shareholders are scheduled to vote on the SoftBank offer on Wednesday, though the meeting may be postponed to give Dish more time to make its bid formal. Clearwire shareholders are set to vote on Sprint’s bid on Thursday.

SoftBank and its chief executive, Masayoshi Son, desire Sprint, the cellphone service company, as the cornerstone of a plan to challenge ATT and Verizon Wireless in the United States. For Sprint, buying the roughly 50 percent of Clearwire that it does not already own would provide crucial extra bandwidth to build out a next-generation data network.

But Charles W. Ergen, the chairman of Dish, has managed to upend the carefully laid out plans of Sprint and SoftBank. Dish’s cash-and-stock bid for Sprint is worth about $7 a share, compared with SoftBank’s offer of roughly $6.45 a share.

Dish has sought a cellphone network partner that can help it take advantage of its big wireless spectrum holdings, helping transform the satellite television company into a provider of broader wireless services.

Still, people close to Sprint and SoftBank have expressed bewilderment at the moves by Mr. Ergen, a onetime professional gambler. Dish surprised many with the unveiling of its bid for Sprint in April, then embarked on an unusually pointed campaign aimed at raising national security concerns about the SoftBank deal. (The transaction eventually won clearance from the Committee on Foreign Investment in the United States, which oversees the review process.)

Dish first bid for Clearwire earlier this year, then went silent for months before raising its offer two weeks ago.

SoftBank has staunchly defended its bid for Sprint, repeatedly assailing Dish’s offer as unworkable, and won the conditional support of an influential shareholder advisory firm. The Japanese company has argued that it can close its deal by next month, while its rival would need much more time, costing Sprint shareholders money.

But SoftBank has been laying the groundwork for a potential backup plan: It has been in talks with Deutsche Telekom about potential options for the German telecommunication concern’s majority stake in T-Mobile US, according to a person briefed on the matter.

SoftBank and Deutsche Telekom were in talks even before the Sprint deal was announced last fall, and the two have kept in regular touch since, this person said. The Japanese company has stressed that it wants to find an entry point into the United States market, even if its bid for Sprint fails.

Word of SoftBank’s interest in buying Deutsche Telekom’s 74 percent stake in T-Mobile US, however, may simply be an attempt to sway recalcitrant Sprint shareholders.

Sprint shares closed on Friday at $7.24, more than 12 percent above SoftBank’s bid. Shareholders have argued that SoftBank must offer more for Sprint, especially in light of Dish’s higher bid.

Shares in Clearwire closed on Friday at $4.40, the clearest sign of investor dissatisfaction with Sprint’s latest bid.

Sprint has challenged the legality of Dish’s bid for Clearwire, contending that it violates an existing shareholder agreement. Dish has argued otherwise.

But Mr. Son of SoftBank has publicly said that he would be satisfied with Sprint owning less than 100 percent of Clearwire. Existing pacts with other big shareholders would furnish Sprint with more than 65 percent of Clearwire.

Still, Dish could prove a formidable hindrance to Sprint if it becomes a big minority shareholder in Clearwire, possibly forcing the company into a partnership or an expensive deal to buy out its unwelcome dance partner.

That is, if Dish doesn’t buy control of Sprint.

A version of this article appeared in print on 06/10/2013, on page B3 of the NewYork edition with the headline: Sprint and SoftBank Weigh Alternatives to a Deal.

Article source: http://dealbook.nytimes.com/2013/06/09/sprint-and-softbank-weigh-alternatives-to-a-deal/?partner=rss&emc=rss

Wall Street Slips

Stocks on Wall Street traded lower on Monday after data from China showed growth to be slower than anticipated, knocking oil and gold prices lower.

The Standard Poor’s 500-stock index dipped 0.8 percent in morning trading, while the Dow Jones industrial average fell 0.7 percent — more than 100 points — and the Nasdaq composite index lost 0.9 percent.

China’s economic recovery unexpectedly slowed in the first quarter, with the annual rate of growth in the world’s second-largest economy easing back to 7.7 percent from the 7.9 percent of the previous quarter, below economists’ forecast for an 8 percent expansion, a government report said.

Adding to concerns about a slowing global economy, the Federal Reserve Bank of New York’s index of general business conditions fell to 3.05 points, from 9.24 in March, a bigger drop e than economists had forecast, as new orders tumbled.

Wall Street stocks dipped on Friday, partly because of weak retail sales and consumer sentiment data, but still managed to notch their second-best weekly performance of the year with a 2.3 percent gain.

“None of the economic data has been very good for the last couple of weeks,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vt. “I wouldn’t say this is over yet, but there are enough indicators out there to really indicate that investors should approach this market with a degree of caution which doesn’t seem to exist right now.”

European stocks fell modestly, with the Euro Stoxx 50 index of euro zone blue chips down 0.3 percent and the FTSE 100 in London down 0.8 percent in afternoon trading.

Among earnings reports, Citigroup shares advanced 2.5 percent after reporting a higher-than-expected 31 percent rise in first-quarter profit.

In deal news, Dish Network, the No. 2 satellite television provider in the United States, offered to buy Sprint Nextel for $25.5 billion in cash and stock, a move that could thwart the proposed acquisition of Sprint by Japan’s SoftBan. Sprint shares jumped 16 percent.

The Chinese data weighed heavily on commodities, with crude oil down 1.8 percent in New York trading to $89.69 as it recovered slightly off its lowest level of the year. Gold sank further into bear market territory. Freeport-McMoRan Copper and Gold lost 6.4 percent and U.S.-listed shares of Randgold Resources stumbled 7.7 percent.

Earnings season heats up this week, with 74 companies in the S.P. 500 scheduled to report, including American Express, Goldman Sachs, Bank of America and Google.

The genetic testing equipment maker Life Technologies has agreed to a $13.6 billion cash buyout by Thermo Fisher Scientific, in one of the year’s biggest corporate takeovers. Life Technologies shares climbed 7.8 percent.

Article source: http://www.nytimes.com/2013/04/16/business/daily-stock-market-activity.html?partner=rss&emc=rss

The Media Equation: More Cracks In TV’s Business Model

People were free to shop for what they wanted, as long as they were willing to buy a bunch of other stuff they did not. The box score last night for your home team? It was wrapped inside a bundle of paper that included everything from foreign news to ads for lingerie. If you liked a song, you generally had to buy an album full of others to get the goods.

As for advertisers, the audience they wanted was bundled inside a much larger audience of people they did not. To get at the milk, both consumers and businesses had to buy the cow.

Television has thrived on this kind of systematic stacking, but though bundles may be a handy way of protecting things, they also tend to obscure the weaknesses within. Those flaws are becoming more apparent as the practice of bundling comes under attack.

Networks are stepping up the fight against Dish Network’s Hopper, which automatically skips the commercials in network programming. Aereo won a court decision on April 1, letting it continue its rollout of a service through which consumers can access broadcast signals online without Aereo paying any of the estimated $3 billion that broadcasters will take in from retransmission fees by 2015.

And tellingly, there has been some breaking of ranks between the companies that make content and the people who send it through the pipes to consumers. Most notably, Cablevision filed an antitrust suit against Viacom challenging its requirement that the cable company carry rarely viewed channels to get access to Viacom’s more popular ones. (Verizon did not join the lawsuit, but is also asking for less bundling and more options.)

Finally, there is the success of Netflix’s “House of Cards,” original programming delivered over the Internet, with no cable required. The company announced on Facebook that customers had watched four billion hours of streaming video in the first three months of the year. As Peter Kafka pointed out in AllThingsD, Richard Greenfield of BTIG Research calculated that eye-popping number would make it the most-watched cable television network. Except it isn’t on cable, isn’t on television and isn’t a network.

Those initiatives represent assaults on different parts of the business, but each is an attack on the bundle, and the legacy industry is reacting ferociously. Aereo is a finger in the eye of broadcasters, prompting some to suggest they might turn off their broadcast signals and become cable channels — as Fox threatened last week. (The biggest losers in that situation would be the more than 11 million cable-less households that still depend on antennas.)

Charles Ergen, the chairman of Dish Network, was recently called the “most hated man in Hollywood” by The Hollywood Reporter because he dared to give consumers the ability to unbundle advertising and programming with a touch of a button using Hopper. It brings to mind the scene from Ken Auletta’s book “Googled,” when Mel Karmazin, then chief executive of Viacom, visited Google and saw a demonstration of the company’s ability to target ads. He declared that the company was, um, messing “with the magic.”

That’s because media companies have another word for those consumer inefficiencies: profits.

“The bundle is the Gibraltar of the media business,” said Tim Wu, the author of “The Master Switch,” a history of media revolutions. “It keeps the entire ecosystem alive, which is why it is so heavily and successfully defended. But there are hairline fractures beginning to appear, and you are seeing alliances shift.”

Historically, once the consumer decides, it doesn’t matter what stakeholders want. They can’t stop what’s coming.

The advent of the Internet presented an existential challenge to bundles. Once consumers got their hands on the mouse and a programmable remote, they began to attack the inefficiencies of the system. When seeking information, they sought relevant links, not media brands. And DVRs put them in the control room of their own viewing universe.

Susan Crawford, a professor at the Benjamin N. Cardozo School of Law and the author of “Captive Audience,” says she thinks television bundles will be with us for a while — six to eight years — regardless of what the consumer wants.

“It’s like the picked-on kid who tries to get home to his front porch; he has to make it past all the bullies first,” she said. “We have a heavily defended, heavily concentrated programming industry and a monopoly in distribution, with none of the big players willing to act like a maverick. No one wants to break ranks because the current system has been so lucrative.”

Of course, the government could get involved, as it did in breaking up Hollywood’s closed system of production and distribution in the 1930s and ’40s. The result was a lot of disruption, a blossoming of cinema in the ’60s and ’70s, and by the way, a movie industry that still has scale and profits.

E-mail: carr@nytimes.com;

twitter.com/carr2n

Article source: http://www.nytimes.com/2013/04/15/business/media/more-cracks-in-televisions-business-model.html?partner=rss&emc=rss

Business Briefing | Company News: Blockbuster to Introduce Streaming via Dish Network

Blockbuster introduced a video streaming service limited to subscribers of the satellite provider Dish Network, a move to better compete against the video rental giant Netflix and to lure customers from rival cable and satellite TV providers. For non-Dish subscribers, the company also plans to introduce an online streaming plan later this year. The announcement came as Netflix has stumbled with an unpopular price increase and other missteps that have sent the company’s shares tumbling 50 percent in two months. Called Blockbuster Movie Pass, the subscription service will start at $10 a month and includes DVD rentals by mail and at the company’s more than 1,500 stores.

Article source: http://feeds.nytimes.com/click.phdo?i=3c439beda1740df81a65e242844a00b2

Al Jazeera English Arrives on N.Y. Cable

CNN had the gulf war. Fox News had the war on terror. And Al Jazeera English had the Arab Spring.

But six months after widespread protests erupted in the Middle East, the Qatar-based Al Jazeera has not gained distribution on any major cable or satellite systems in the United States. The channel’s supporters say they feel it has been blacklisted; the distributors say they have to contend with limited channel space.

Undeterred, Al Jazeera English executives say they are making headway. On Monday, the channel will be carried in New York City for the first time, though only by subletting space from a channel owner. The channel has a foothold in Washington through a similar arrangement.

“We will get on in the U.S.,” Al Anstey, the channel’s managing director, said confidently in an interview in Manhattan, where he came late last week to celebrate the carriage deal.

Al Jazeera English was lauded by the United States government and even by a few competitors for its broadcasts from Egypt and other Middle Eastern countries earlier this year. But it is finding out that cable and satellite distributors like Comcast, DirecTV and Dish Network wield an enormous amount of control over the channels that viewers in the United States can and cannot see. “It’s all about leverage in this business, and they don’t have any,” said Paul Maxwell, the head of a cable industry consulting firm.

Al Jazeera does not have a parent company with powerful assets, as the News Corporation did when it used the huge popularity of Fox News to gain channel space for a spinoff, Fox Business, a few years ago. Nor does it have proof that millions are clamoring to watch, as most Americans have not been exposed to the channel.

Reflecting what some distribution executives said on condition of anonymity, Mr. Maxwell suggested that the dearth of evident demand was the main reason for Al Jazeera’s being shut out. Still, he said, “I think it should be carried; there is a public interest reason for it.”

The channel was founded in 2006 as a competitor to CNN International and the BBC. It was an offshoot of Al Jazeera Arabic, the popular Arab satellite news network that was demonized by the Bush administration as a platform for anti-American propaganda, in part because it broadcast Al Qaeda videotapes. Furthering the tensions, American missiles struck Al Jazeera offices in Afghanistan in 2001 and in Iraq in 2003 during the wars in those countries. In both cases United States officials said the strikes were mistakes.

The tensions began to ease toward the end of the Bush administration. But Al Jazeera officials say they believe that American impressions of both the Arabic and the English channels were harmed. Early meetings with distributors were about correcting “myths and misperceptions” of the English channel, Mr. Anstey said. Now, he added, those myths never come up.

The channel and its lobbyists have worked hard to change perceptions in Washington and in the media out of a conviction, Mr. Anstey said, that once people watch Al Jazeera English, they come to recognize that “what we’re putting out is high-quality information, well told.”

The lobbying effort was helped by the channel’s exhaustive and in some cases exclusive coverage of the protests in Tunisia, Egypt and elsewhere this year. Al Jazeera immediately began an advertising campaign and encouraged viewers to write to United States distributors to demand carriage, and Mr. Anstey traveled to the United States to meet with distributors like Comcast and DirecTV.

“We had some very fruitful meetings,” he said over a double espresso at the Grand Hyatt in Midtown Manhattan last week. “We’re making some very good headway.”

He disputed the suggestion that the channel was not in demand, citing 70,000 supporter letters that were sent to distributors via the Al Jazeera Web site. He and others at the channel were electrified in March when Secretary of State Hillary Rodham Clinton labeled Al Jazeera “real news” and contrasted it with the commercials and “arguments between talking heads” on United States-based channels. Ms. Clinton’s comments raised the ire of some conservatives, but overall criticism of the channel has been limited.

The country’s biggest cable and satellite companies each declined requests for interviews about Al Jazeera last week; most cited policies against talking about any specific carriage decisions. But they expressed no public concerns about Al Jazeera’s content.

Article source: http://feeds.nytimes.com/click.phdo?i=75c6d943abcdd291dec809be8ee6ce1e