Sprint Connection

A look at Charles Ergen, the man who wants to buy Sprint

Updated: 2013-04-17T03:11:10Z


The Kansas City Star

Who is Charles Ergen, the 37th richest man in America and self-described “country boy from Tennessee” who wants to plant his powerful foot in Kansas City and snag Sprint Nextel?

For one thing, he’s a corporate mogul with a different style from Masayoshi Son, the second-richest man in Japan, who also has a deal with Sprint.

And in character and corporate culture, Ergen also is a different breed from Sprint CEO Dan Hesse, whose job outlook could be starkly changed if Ergen’s bid beats out Son’s.

Ergen, 60, is a former door-to-door satellite dish salesman who now oversees Dish Network from its headquarters in a Denver suburb. He lived up to his swashbuckling reputation Monday, mounting a late-entry challenge to Son’s longstanding SoftBank Corp. offer for Sprint.

Analysts and writers in the business press who’ve dealt with Ergen describe him as a poker-playing dealmaker, fearless about proposing mega deals, unafraid to pursue litigation to settle disputes, and – hold on to your chairs, Sprint employees – head of “the meanest company in America.”

The “mean” title topped a long Bloomberg Businessweek article in January about Ergen, who’s worth an estimated $10.6 billion as the founder and chairman of Dish, the Englewood, Colo., company that provides satellite TV service.

Ergen, speaking at a February digital media conference, said “mean” was a bit unfair. Rather, he said, he and the Dish company are “demanding.”

The article cited employee complaints about long hours and a “poisonous” environment and blamed Ergen, known for publicly yelling at employees. The “mean” label came partly from tabulating posts on glassdoor.com, an online site where employees can comment about their companies.

One example of his hard-driving style: When snow threatened the Denver area, Ergen reportedly suggested in a staff meeting that employees should book nearby hotel rooms (at their own expense) so they wouldn’t be late driving to work.

For his part, Ergen said, “We work hard.… We want you to take personal responsibility.… If you don’t think you can make a difference, we’re not a good place for you.”

Showing occasional flashes of wit, he said he did care about his employees, “but that doesn’t mean I give them everything they want.” Rather, he said, he provides an environment that “helps them reach their potential.”

Still, Ergen doesn’t seem to have a huge fan club. Institutional investors also complain that Ergen seems to go out of his way to be uncooperative.

“They’re probably the least transparent company of any I’ve ever dealt with,” Chris Marangi, a portfolio manager at Gamco Investors, told Businessweek.

But Ergen was pretty transparent about his intent in connection with the Sprint bid:

“Sprint is in play,” he told the Dow Jones News Service in New York. “We think we’ve made an offer that’s much more compelling than the SoftBank transaction.”

It’s Ergen’s strongest move yet to transform Dish from being just a pay TV alternative to being a player in the wireless industry. Getting control of Sprint’s spectrum is a logical step after Dish last year got regulatory approval to provide mobile phone service. Dish needs a cellphone network to make that happen.

The goal, as he explained at the digital media conference, is to offer video, high-speed Internet and voice service in one package that people could use with their mobile devices. Dish took a tentative step toward that earlier this year with an informal offer to buy Clearwire Corp., a wireless carrier that’s half-owned by Sprint.

And whatever one thinks of Ergen or his management style, he’s built a solid business record.

Ergen started on the road to this point in 1980 when he co-founded EchoStar Communications, a satellite services provider. EchoStar launched Dish Network in 1996, competing with DirecTV. The renamed Dish spun off from EchoStar in 2008.

In April 2011 Dish bought bankrupt retailer Blockbuster for $320 million. It then bought $3 billion in broadband spectrum.

The Sprint foray isn’t Ergen’s first stab at a mega deal. He tried in 2002 to buy DirecTV owner Hughes Electronics. That attempt was blocked by regulators. EchoStar eventually bought Hughes in 2011, though Dish and DirecTV were no longer involved in that deal.

Son also ambitious

Son, 55, the multibillionaire founder of SoftBank, loses no ground to Ergen in terms of ambition and entrepreneurial talent, but he’s amassing his business empire in a far more publicly visible way than Ergen.

While building a personal fortune estimated at more than $9.1 billion, Son has bought controlling interest in an international lineup of technology companies. He is said to be the most-followed business celebrity on Twitter in Japan.

Often called “the Bill Gates of Japan,” Son has taken bold risks under what he calls a 300-year plan, a far broader outlook than Ergen’s 10-year plan to expand Dish. Along the way, he’s also become known for philanthropy.

After the terrible Japanese tsunami and nuclear plant meltdown, Son was reported to have pledged $125 million to relief agencies and pledged his future salary from SoftBank to orphans from the disaster.

Son is variously described as charismatic, a shrewd negotiator, articulate and outspoken.

Against entrenched competition, Son made dramatic inroads into the cellphone industry in tech-loving Japan — at an impressive rate.

Now he wants to use his company’s money to shake up the wireless status quo in the United States, hoping to transform Sprint, the No. 3 wireless company, into a stronger competitor to Verizon and AT&T.

“It’s not an easy path to go,” Son said at a Tokyo press conference last fall announcing the Sprint offer. “But without taking on a challenge, we may end up facing bigger risks.”

One notable thing about his bid for Sprint: If SoftBank wins Sprint, Hesse is expected to keep his job, and the Sprint headquarters is expected to stay in Overland Park. The Dish offer is silent on those points.

Despite the difference in height between the towering Hesse and far shorter Son, they appeared in public to show an eye-to-eye warmth in Tokyo when the SoftBank offer became public. Hesse and Son have known each other for years, from the early 2000’s when Hesse ran Terabeam Corp., a telecommunications company, and Son was on the board.

Hesse wins praise

Hesse, who made a folksy reputation for himself in TV commercials, is a 12-hour-a-day, six-days-a-week executive, known for working hard and pushing Sprint employees to grow the company through incremental innovation.

He’s generally seen as an executive who has employees’ interests at heart and is given to talking about his “team” in interviews. He wins praise for style from employees and business leaders alike.

“Dan is a rare leader in that he can manage complexity and challenge in ways that create a clear understanding of goals, along with the support and inspiration to help his team deliver them,” said Kansas City business executive Irvine O. Hockaday Jr., who previously served on the Sprint board.

Hesse, 59, also likes to describe his adaptability, born of an “Army brat” youth when he moved often and learned to quickly size up people and their character.

Since he became Sprint’s chief executive in 2007, Hesse has been on a repair mission. A $36 billion purchase of Nextel had failed. About 7.7 million subscribers had left Sprint. A joint venture with Clearwire Corp. was troubled. But after seven years of losses, he has said he expects Sprint to show a profit in 2014.

Given Monday’s announcement, it’s unknown under what ownership a profitable 2014 might happen.

To reach Diane Stafford, call 816-234-4359 or send email to stafford@kcstar.com.

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