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DISH Network Corp. (DISH), Verizon Communications Inc. (VZ), And This Potential Play

DISH Network Corp. (NASDAQ:DISH) is often overlooked by investors mainly for being the number two satellite provider in the U.S., behind DIRECTV (NASDAQ:DTV). However, the largest companies are not always the best value, and often come with a premium valuation. With DISH Network hovering around its 52-week high, I want to know if there are still gains to be had with this one, or if the biggest company really is the best choice.

About DISH and its Acquisition Saga

Over the last decade, satellite TV has increased in popularity tremendously, as illustrated by the revenue chart above. DISH Network Corp. (NASDAQ:DISH) has been providing its service since 1996, and has grown to almost 14 million subscribers in the U.S. and 15 in-orbit satellites.

DISH has grown over the past few years through acquisitions, and has been trying to acquire Clearwire Corporation (NASDAQ:CLWR). Sprint Nextel Corporation (NYSE:S) recently bid $2.90 per share for Clearwire, who said the bid was too low. Shortly thereafter, DISH offered $3.30 for Clearwire, outbidding Sprint, but it’s not that simple. As Sprint owns a majority (51%) stake in Clearwire already, Clearwire says that while it will consider the bid from DISH Network Corp. (NASDAQ:DISH), it is limited by current contractual arrangements with Sprint.

With Sprint (who was already a takeover target of Softbank) seemingly set to block DISH’s deal, DISH instead decided to make a bid to buy all of Sprint, for 13% more than Softbank was offering, with Sprint shareholders receiving about $7 per share. If successful in its takeover of Sprint, DISH Network Corp. (NASDAQ:DISH) has already said it will still honor its initial offer to buy Clearwater. Confused yet?

If DISH is successful in purchasing Sprint Nextel Corporation (NYSE:S), it will acquire not one cellular network, but two in one transaction. Buying Sprint would allow DISH to offer video, internet, and voice service across the country. DISH’s current internet service is not competitive with rivals, performance-wise, and this could change dramatically with Sprint’s network infrastructure. This could create a bundling option where current Sprint customers could bundle with DISH Network Corp. (NASDAQ:DISH)’s satellite services, something that DIRECTV (NASDAQ:DTV) cannot provide. The transaction would create a company with over 60 million retail subscribers and over $50 billion in revenues.

Many TV Options

When it comes to investing in TV providers, satellite is only one of the options. There are many cable companies that look appealing, such as Comcast Corporation (NASDAQ:CMCSA) and Time Warner Inc (NYSE:TWX). In addition to cable and satellite, don’t forget the new entries such as U-Verse by AT&T Inc. (NYSE:T), which happens to be one of my favorite all-around investments, especially after its recent decline and Verizon Communications Inc. (NYSE:VZ)’s recent increase. These two used to be neck-and-neck when it came to high-yielding telecom giants. Now AT&T yields 4.86% while trading for 16 times TTM earnings, as opposed to Verizon Communications Inc. (NYSE:VZ)’s 3.84% yield and higher P/E multiple of 23.2. Before deciding, investors need to consider the risk involved with each, as well as their valuation and growth potential, however out of this group I think AT&T Inc. (NYSE:T) is the clear bargain now.

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