In the past couple of weeks and during the Consumer Electronics Show, Dish Network (NASDAQ:DISH) made some notable announcements. Out of these, two strategic announcements are of great significance. Firstly, the company stated that it has entered into a partnership with ViaSat to offer broadband service to its customers.  Under the partnership, the company will be bundling its pay-TV services with ViaSat’s high-speed satellite broadband with bundles starting at around $80 per month.  The company hopes to revive its subscriber trends with this move and additionally tap into rural market of about 8 to 10 million subscribers.  Dish Network has an advantage over cable companies such as Comcast (NASDAQ:CMCSA) and Time Warner Cable (NYSE:TWC) in terms of rural reach due to its satellite medium. Thus the new partnership can open more revenue opportunities in rural regions as well as help it expand in urban areas.
The second announcement pertains to possibility of acquisition. The company has been acquiring wireless spectrum assets in the recent past, including those of DBSD North America and TerreStar.
Dish has long stated that it intends to launch its own broadband service at some point and that will help it better hedge it business and improve pay-TV subscription trends. The strategy is not just to execute the broadband step, but also to make itself an attractive acquisition target. AT&T is hungry for spectrum, especially after its failed bid with T-Mobile. With Dish recently announcing that it is open to getting acquired, AT&T could be willing to pay a handsome premium for Dish Network. 
The acquisition will not only help AT&T get the network capacity, but also create cross marketing opportunities by leveraging Dish Network’s subscriber base as well as its Blockbuster stores.
Our price estimate for Dish Network stands at $30.88, implying a premium of more than 5% to the market price.Notes:
- DISH Bundles TV Service with ViaSat’s Next-Generation High-Speed Satellite Broadband, Dish Network Press Release, Jan 9 2012 [↩] [↩] [↩]
- AT&T’s Need for Spectrum Signals 77% Premium for Dish: Real M&A, Bloomberg, Jan 18 2012 [↩]