There is simply no way to view the comments by a federal judge last week that he will not issue his decision in the lawsuit filed by the government to block AT&T’s purchase of Time Warner until after April 22 as anything but bad news for the telco behemoth. Also, the consumer media and some in the financial press went bonkers last week when Dish Network announced that Chairman Charlie Ergen was once again giving up the chief executive title. It was hilarious. If Ergen was really interested in turning over the reins to someone else, he would have recruited a big name chief executive to take over.
Satellite Business News — Despite attempts by AT&T to spin it to the contrary, there is simply no way to view the comments by a federal judge last week that he will not issue his decision in the lawsuit filed by the government to block the company’s purchase of Time Warner until after April 22 as anything but bad news for the telco behemoth.
The only question is just how bad the news was for AT&T that Time Warner will now have a unilateral right to terminate the deal by that date. To be sure, Time Warner’s senior management has millions and millions of reasons to extend the termination date again, given the golden parachutes they would get. But they, along with the Time Warner board of directors, also have a fiduciary responsibility to the company’s shareholders to protect their interests.
A strong argument could be made that Time Warner’s management and board would be negligent if they did not use the opportunity afforded them by federal Judge Richard Leon to renegotiate certain points in the agreement with AT&T.
As of now, Time Warner would get a $500 million breakup fee if the deal does not close. At the least, Time Warner might ask AT&T to double or triple that amount in return for an extension of the termination date. AT&T has said the break-up fee was relatively small compared to the size of the deal because Time Warner thought the transaction would sail through Washington. Putting aside how silly an assumption that was to begin with, it obviously is not now.
The government has a strong case. And even if Time Warner remains committed to the deal, should it support AT&T indefinitely if Leon rules in favor of the Justice Department but AT&T wants to appeal? At what point does Time Warner need to cut it loses, end the uncertainty now surrounding the company, and move on?
That has to be a hot topic of discussion at Time Warner in light of last week’s developments. If it is not, are not Time Warner’s shareholders getting the short end of the AT&T telephone pole?
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The consumer media and some in the financial press went bonkers last week when Dish Network announced that Chairman and co-founder Charles William Ergen was once again giving up the chief executive title. It was hilarious. Some of the stories, and especially the headlines, almost implied Ergen was leaving the company.
In reality, here is exactly what the executive moves announced last week mean from a strategic and operational standpoint at Dish Network: Nothing. Absolutely nothing. Sure, the value of the Ergen family’s holdings in Dish Network go and up and down based on the stories such announcements generate. But it is not like they are going to have to worry about paying their bills.
What Ergen did last week he has done in the past — shuffle around his existing executive team and promote from within. Sounds great on paper. But Ergen has not been that involved in the boring day-in-day out decisions at Dish Network for a long time.
Moreover, and as anyone who knows anything about Ergen and his companies understands, the decision loop at Dish Network on major items starts and ends with one person: Charles William Ergen. It always has. It always will.
No disrespect intended for Erik Carlson, or the other people who have intermittently held the Dish Network chief executive title over the years, but come on. Everyone who has had any visibility into Dish Network (and Echostar before that) the past 30 years knows who makes the call on the important things. As has been noted here in the past, that what makes Ergen so valuable to his companies, and, in some regards, that is what sometimes makes him a liability.
In the end, even those who have no insight into Dish Network’s operations can understand this: If Ergen was really interested in turning over the reins to someone else, he would have recruited a big name chief executive to take over.
Again, not to insult anyone at Dish Network, but Ergen has long given up trying to bring in a chief executive who could be his peer. For one thing, no one from the outside who is smart and knowledgeable enough to handle the job would not see through the charade. Can anyone out there imagine Chase Carey, Carl Vogel (know what he now does), Stan Hubbard, Jim Meyer, or any of the handful of other great chief executives in the history of the satellite business (notice Mike White ain’t on the list) reporting to Ergen?
And that, as the kids might say, is all there is to know. There are some good guys working for Ergen, though more than a few who were on that list in the past have headed out for reasons referenced above. But when it comes to the truly consequential decisions, not a thing has changed at Dish Network.
Until the day Ergen decides to hike up the mountain for good — and that is not even close to happening — it never will.
Bob Scherman is the editor and publisher of Satellite Business News, an independent trade publication. Scherman has covered the satellite TV, cable, and related businesses for almost 35 years. Comments on this column can be sent to [email protected].