Way back in the day, late in our inaugural year of 2008, as we plowed through our “How Would You Save” series, we featured this one on Sprint. At the top of our list of recommended strategies to turn around Sprint's fortunes was a marketing partnership with a meaningful hardware player.
Well, today we got one. But not the able hardware company we assumed (see Samsung). Instead Sprint received a gazillion-dollar buy-out bid from satellite pay-TV provider DISH Network, and its wingnut chairman Charlie Ergen.
Before today, Ergen found himself with a bunch of wireless spectrum he wasn't quite sure how to "monetize." Granted, he had plenty of thoughts on what to do with it, but deep down Ergen knows that DISH has neither the capital, knowledge, or customer-acquisition capabilities to make any idea – satellite broadband, wireless broadband, whatever – come to profitable fruition.
Compare the track record just in DISH’s core industry. Over the past five years, here is its scorecard versus larger satellite TV rival DIRECTV:
- Growth in revenues: DIRECTV at 34.2 %, DISH at 22.8 %
- Growth in revenues (CAGR basis): DIRECTV at 7.6 %, DISH at 5.3 %
- Growth in subscribers: DIRECTV at 14.0 %, DISH at 2.8 %
- Average monthly revenue per sub: DIRECTV at $ 96.98, DISH at $ 77.10
- Growth in avg rev per sub: DIRECTV at 15.6 %, DISH at 11.3 %
As for shareholders, they seem to be far better off with DIRECTV, whose stock price has increased 118.0 % from 2008 to the end of 2012. Ergen has rewarded his investors with a five-year return of a paltry 9.8 %.
Headline alarming, pay-TV hater Henry Blodget touts the potential DISH-Sprint deal as a “partnership [that] could change the telecom industry forever.”
Laughable. DISH dishes a very weak hand, for an even weaker wireless player.