On The Money

Charlie’s Angle

Dish Chief Offers Sound Advice on Merger Mania 5/09/2014 11:15 AM

Charlie Ergen may play up the homespun side of his nature at times – make no mistake, this guy is a brilliant and gutsy entrepreneur – but on a recent earnings conference call with reporters, the Dish Network chairman absolutely nailed it when commenting about the merger mania that has swept through the media industry in the last year. Simply put, Ergen said not to believe everything that you hear.

I don’t think Ergen was necessarily criticizing the media as much as he was emphasizing that deals are inherently fluid – big companies talk to other big companies all the time. Sometimes an actual deal results but oftentimes it is the equivalent of old friends bumping into each other at the airport: Sure, there’s a buzz from the initial encounter, but after awhile those dinner plans you made don’t seem worth the trouble and that buzz wears off.

And even the deals that do get done usually don’t take the shape originally expected – the most recent example: Comcast and Time Warner Cable.

In Ergen’s words, “the movie always has a twist,” and he admitted even those players thick in the acquisition game can’t always predict the outcome. “Even the way I think things are going to happen, isn't going to be the way it's going to happen,” he said.

Ergen likened the recent merger frenzy to “drunken fools” throwing money on a poker table and advocated taking a wait and see stance. I’d use another analogy – bankers throwing heaps of spaghetti against a wall in the hopes that the biggest strands stick. Either way, his idea to wait to see how those chips fall may be the most prudent strategy of all.

To bring home that point, Ergen tapped a tried and true poker metaphor.

“You want to get as good cards as you can, you want to keep getting cards and you want to wait and see until it's all out there,” Ergen said. “And then you make your move. I don't know how to explain strategy other than that.”

Neither do I.