Dish's Ergen bids $2B for Falcone's LightSquared, according to reports

Dish Network's (NASDAQ: DISH) Charlie Ergen made a $2 billion bid for bankrupt wireless provider LightSquared, according to multiple reports, a move that could pit Ergen against fellow billionaire and LightSquared financier Philip Falcone.

The move could add LightSquared's contested wireless spectrum to Ergen's growing spectrum war chest, and it represents Ergen's continued efforts to expand his satellite Internet and TV business into mobile. Ergen is in the midst of financing a $25.5 billion bid to acquire Sprint Nextel (NYSE:S)--although Dish is competing against Japan's SoftBank, which is working to acquire 70 percent of Sprint for $20.1 billion. In addition, in January Dish made a $2.2 billion bid for Clearwire (NASDAQ:CLWR) spectrum covering approximately 11.4 billion MHz-POPs, which is approximately 24 percent of Clearwire's total spectrum holdings.

Citing unnamed people familiar with the matter, the Wall Street Journal, Reuters and Bloomberg reported that Dish's Ergen made the $2 billion bid for LightSquared last week. The bid has not yet been shown to the judge overseeing LightSquared's bankruptcy, according to the report. According to Bloomberg, Dish is working to be the "stalking horse" bidder for LightSquared, which means the company would essentially set the minimum price for LightSquared's assets.

In recent months, a hedge fund with ties to Ergen, Sound Point Capital Management, has been buying up LightSquared debt. However, the Journal reported that Ergen's offer is an all-cash bid unrelated to the debt purchases.

Dish and LightSquared declined to comment, according to the reports.

Dish's bid for LightSquared marks another major turning point in LightSquared's long and troubled history in wireless. The company, funded primarily by Falcone's Harbinger Capital Partners, launched in 2010 with a plan to become a "carrier's carrier" with an LTE network that could be resold by other wireless companies. However, LightSquared's plans were essentially scrapped by the FCC, which found that LightSquared's planned network interfered with GPS signals--a ruling that forced LightSquared into bankruptcy. However, LightSquared continues to work for a resolution to its position with a plan that calls for LightSquared to share spectrum that is currently set aside for weather balloons used by the federal government. In exchange, LightSquared said it would permanently relinquish its 10 MHz of spectrum that is directly adjacent to the frequencies used by GPS receivers.

Interestingly, LightSquared inked a network-hosting agreement with Sprint in 2011 that called for Sprint to host LightSquared's core network operations. The agreement between the two companies fell apart after the FCC found that LightSquared's network plan would interfere with GPS signals. If Dish were to acquire LightSquared and Sprint, the move could reignite the teaming between the two erstwhile partners.

For Dish, the purchase of LightSquared would represent a further deepening of the company's spectrum position. Dish in 2011 paid $2.775 billion to purchase DBSD North America and TerreStar Networks, gaining 40 MHz of S-band satellite spectrum in the 2 GHz band, which the FCC rechristened as AWS-4 and approved for terrestrial mobile broadband.

"LightSquared's spectrum is certainly not a near term alternative to Clearwire, given that it will take years for use to be approved, and an L-band ecosystem won't develop until well after that for Dish's AWS-4 spectrum," wrote TMF Associates analyst Tim Farrar. "On the other hand, the L-band has near term value to Dish because of the Mexican situation, and could be a long term backup option, if Dish plans to sit on its AWS-4 holdings for the next several years and wants to rebind it to downlink spectrum, so it's worth forcing Harbinger's hand and ensuring that LightSquared's assets are ultimately auctioned off."

LightSquared has until May 31 to file a plan of reorganization and has sole control over its reorganization plan until July 15.

If Dish is able to purchase Sprint, LightSquared and Clearwire, the company would have a spectrum position to rival that of market heavyweights AT&T Mobility (NYSE:T) and Verizon Wireless (NYSE:VZ). Dish's Ergen has said he wants to add a wireless component to Dish's existing Internet and TV offering, thereby allowing customers to access TV and Internet services both inside the home and on the go.

In other Dish news, SoftBank granted Dish permission to hold deeper talks with Sprint and for Sprint to give non-public information to Dish, another step in the courting process between Dish and Sprint. Sprint said it plans to engage in negotiations with Dish, but that its board currently continues to recommend a deal with SoftBank.

For more:
- see this Bloomberg article
- see this WSJ article (sub. req.)
- see this Reuters article
- see this TMF Associates blog post
- see this Sprint release
- see this AllThingsD article

Related Articles:
Report: Falcone could lose LightSquared to hedge fund affiliated with Dish's Ergen
LightSquared's plan to share spectrum with weather balloons draws cheers, jeers
Reports: Dish lines up financing for $25.5B Sprint bid
Dish trumps Sprint with surprise bid for Clearwire
Sprint consummates LTE network-sharing deal with LightSquared

Article updated May 21 with additional information.

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