May 31, 2013
Dish Network Corp. launched a tender for shares of Clearwire Corp., throwing a wrench into a planned purchase of the broadband company by Sprint Nextel Corp.
The last-minute move complicates a three-way merger aimed at turning Sprint into a stronger competitor in the U.S. wireless market. Sprint, which agreed to buy the roughly 50% of Clearwire it doesn't already own, also agreed to be bought for $20 billion by SoftBank Corp. of Japan. Clearwire delayed its shareholder vote as a result of the bid until June 13, while Sprint's shareholders will vote on the deal with SoftBank on June 12. While Dish stands little chance of taking over Clearwire given Sprint's big shareholdings, it could in theory win enough of a minority stake to create unwanted headaches for Sprint and SoftBank as they try to knit the companies together.
Sprint is currently the main customer for Clearwire's broadband service, but Dish said the tender could give it a way to sign deals to access Clearwire's spectrum. Analysts speculated that Mr. Ergen also might be trying to compel Sprint and SoftBank to sell him a chunk of Clearwire's spectrum. SoftBank Chief Executive Masayoshi Son has taken aim at the U.S. wireless market in search of growth. Clearwire isn't a household name, but it is central to his expansion plan because of its sizable holdings of the airwave rights all wireless operators need to offer service. Dish is offering to buy shares in Clearwire for $4.40 apiece, well above the $3.40 a share offered by Sprint. Clearwire's shares rose 29% on Thursday to $4.50, a sign investors don't think a deal is likely to get done at Sprint's price. Clearwire's board is expected to delay the shareholder vote in light of the new tender.
Dish Chairman Charles Ergen is looking to get into wireless as growth in its satellite television business slows and to offer his subscribers a competitive high-speed Internet access service. The company's tender is for all of Clearwire, but it wants at least a 25% stake, along with governance rights and seats on the company's board. Those latter requests are long shots. New directors need to be approved by four out of five members of the nominating committee of Clearwire's board, according to the company's governance rules, and Sprint can control two of those seats. No matter how successful Dish is with its tender, Sprint likely will end up with a large majority due to agreements to buy out other minority shareholders and notes it holds that can be converted into Clearwire stock.
Mr. Son has repeatedly expressed his confidence that Sprint would likely have enough influence over Clearwire if Sprint wasn't able to complete a takeover, saying that the majority stake is "good enough." Still, controlling Clearwire via a majority stake isn't as straightforward as owning it outright. Clearwire would still be an independent company, and its minority shareholders would have rights. In recent years, despite Sprint's large shareholding, the companies have had fierce disagreements over pricing, network plans and Clearwire's use of cash in a failed push to create a retail presence. The involvement of Mr. Ergen as a vocal minority shareholder could make that relationship even more contentious. "He's trying to wedge himself in there and be a thorn in Masa's side," said New Street Research LLC analyst Felix Wai, referring to Mr. Son by his nickname, Masa. Sprint is currently the main customer for Clearwire's service, but Dish said the tender could give it a way to sign deals to access Clearwire's spectrum. Analysts speculated that Mr. Ergen might alternatively be trying to compel Sprint, and SoftBank to sell him a chunk of Clearwire's spectrum.
In a regulatory filing Thursday, Dish said it has been in regular contact with Clearwire over the past few months seeking more information about the company's spectrum, but Clearwire executives declined to give Dish certain documents it was seeking, saying it already had provided "sufficient information." Clearwire declined to comment. Dish has made a $25.5 billion rival offer to acquire Sprint. Sprint's board hasn't accepted that offer or determined that it could lead to a better deal than Softbank's. Dish said its interest in Clearwire doesn't diminish its interest in buying Sprint. Some investors are betting Mr. Ergen's maneuvering won't amount to much. "I find it fascinating that the market is giving so much credibility to Charlie Ergen's poker moves," said activist investor Robert Chapman, who began betting against Clearwire's shares Thursday. Wall Street Journal
On Tuesday, May 28, the PA Chamber sent a memo to state House members asking for their support of the proposed Fair Enforcement of Labor Anti-Injunction Act. The soon-to-be-introduced bill would address situations in which individuals have committed an unlawful act during a labor-related protest and violated an injunction. Under the bill, those disobeying the injunction could be held responsible for any incurred enforcement costs.
The legislation is necessary because while Pennsylvania's Labor Anti-Injunction Act protects the right to stage protests against businesses, such as forming picket lines, the law does not afford protestors the right to do things that would harm the business or disrupt daily operations. When these unlawful acts do occur, a judge may respond with an injunction that directs the local county sheriff to order the protestors to cease their activity. Unfortunately, those injunctions can sometimes be ignored, leaving the business with little recourse and significant expenses if constant enforcement is necessary. The proposed legislation would not affect anyone lawfully protesting against a business with which they have a dispute. It would, however, hold individuals or groups who unlawfully disrupt a business's operations and disobey a court-ordered injunction accountable for the financial repercussions of their actions. The proposal is sponsored by state Rep. Steve Bloom, R-Cumberland. PA Chamber of Business and Industry Sentinel
Roku Inc., the streaming video device maker, said Wednesday that it has raised $60 million in its sixth round of funding. Media giant Hearst Corp. and an unnamed institutional investor joined existing backers such as News Corp. and its subsidiary British Sky Broadcasting in the round. Roku's service offers an alternative to broadcast, cable and satellite television and first supported Netflix viewing five years ago. The funding round brings the total raised to date to $140 million and comes as the battle for the living room heats up as traditional pay-TV subscriptions stagnate in the U.S. Apple CEO Tim Cook told the All Things D conference Tuesday that his company has a "grand vision" for remaking TV. Microsoft Corp. last week unveiled a new gaming console, the Xbox One, that lets users can flip through channels using voice commands. Roku says the funding will help it develop its video-streaming software and services business. It has sold more than 5 million devices in the U.S. since its founding in 2008. That compares with about 13 million for Apple Inc.'s Apple TV, a box that also lets people watch video from the Internet on their TVs.
Netflix will join the Nasdaq 100 index next month. The Los Gatos, Calif., company will replace Perrigo Co., a maker of over-the-counter drugs. Perrigo announced last week that it is transferring its stock listing to the New York Stock Exchange from the Nasdaq. Netflix said that in addition to the Nasdaq 100, it will join the Nasdaq 100 Equal Weighted Index and the Nasdaq 100 Ex-Technology Sector Index before the market opens Thursday. Shares of Netflix Inc. stock added 34 cents to $223 in premarket trading on Friday. Its shares have more than doubled in value so far this year and a move to the Nasdaq 100 probably won't hurt, either, with some investment funds requiring a percentage of capital be placed there. Associated Press
Quotable: "Actually, I had dated her roommate before. Her roommate canceled a date because she had cut her foot or something. So I said, would you mind if I take Sue to the movie? That was it." - Gov. Corbett, in a new "Out & About" video on Philly.com, explaining how he met his wife in college. Philadelphia Daily News
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