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DISH Network Corp. (DISH): The Company’s $9 Billion Coffer and Its Future

DISH Network Corp. (NASDAQ:DISH) has lots and lots of cash — more than $7 billion following this week’s debt issuance. As opposed to other cash hoarders, there’s no secret as to what the company wants to spend it on. DISH is knee-deep in the race for spectrum and wireless buildout to launch its much-anticipated 4G network. The question is, where will the company make its purchase? As Sprint Nextel Corporation (NYSE:S) and Clearwire Corporation (NASDAQ:CLWR) continue to cozy up, the satellite-television provider will likely have to look elsewhere for its spectrum bundle. Where will the billions go?


To buy, or be bought?
DISH Network Corp. (NASDAQ:DISH), despite the occasional stumbles and mediocre subscriber gains, is a thriving business, with strong cash flows and sound management. Its biggest detractor is more than $11 billion in long-term debt.

The company does not need a buyer, but it may happen anyway. DIRECTV (NASDAQ:DTV) has been killing it in Latin America, adding millions of subscribers in a relatively short period of time. Even in the U.S., where pay-tv penetration approaches total saturation, the company has increased its average revenue per user, and found ways to boost its North American cash flows. Meanwhile, DISH Network Corp. (NASDAQ:DISH)’s numbers have suffered, similar to the numbers of cable companies.

This presents an interesting opportunity for both companies. DISH could use the Latin American subscriber growth, and DIRECTV (NASDAQ:DTV) could gain immediate exposure to the wireless network effort. It would be a pretty textbook case of a symbiotic merger — more like an acquisition, since DTV is the bigger company.

In the company’s last conference call, DISH Network Corp. (NASDAQ:DISH) CEO Charlie Ergen said he would have to consider the buyout possibility, because it just makes sense. While not the most enthusiastic language, he’s absolutely right.

But, meanwhile, what is to be done with the billions the company just raised in a debt offering, not to mention the quarterly cash flows that continue to add hundreds of millions?

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