Dish Network Corp. (DISH), the second- largest U.S. satellite-TV provider, offered to buy TerreStar Networks Inc. for $1.38 billion as it makes acquisitions to move beyond its traditional pay-television business.
Dish has agreed to act as the lead bidder at an auction for TerreStar, which uses a satellite network to provide mobile- communications service, according to a filing by TerreStar today in U.S. Bankruptcy Court in Manhattan. TerreStar filed for bankruptcy last year and put itself up for sale after an earlier restructuring effort fell apart.
The deal for TerreStar follows moves by Charlie Ergen, the billionaire chairman and co-founder of Dish, to buy out of bankruptcy video-rental chain Blockbuster Inc. and DBSD North America Inc., another a satellite communications company. Ergen is interested in TerreStar’s wireless spectrum, which is rising in value amid growing sales of smartphones, said Walter Piecyk, an analyst at BTIG LLC.
“Owning this asset enables someone to deliver what we think will be a huge demand for wireless data,” Piecyk said.
TerreStar, based in Reston, Virginia, filed for bankruptcy last year with a plan that would have given ownership to EchoStar Corp. (SATS) and other creditors, according to court papers. TerreStar dropped that plan when it couldn’t get creditor support and moved to put itself up for sale.
EchoStar, which provides set-top boxes and satellite services, was spun off from Dish, based in Englewood, Colorado in 2008. Ergen is also chairman of EchoStar. A majority of the voting power of both companies is owned by Ergen or trusts for his family, according to company filings.
Marc Lumpkin, a Dish spokesman, declined to comment.
Dish fell 31 cents, or 1.1 percent, to $27.82 at 3:33 p.m. New York time in Nasdaq Stock Market trading.
TerreStar said in court papers that it will extend the deadline for rival bids for the company to June 27 and hold the auction on June 30.
The case is In re TerreStar Networks Inc., 10-15446, U.S. Bankruptcy Court, Southern District of New York (Manhattan)
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