Moody's unsure what Joe Clayton is up to


Dish Network has made three big acquisitions so far this year and newly installed CEO Joe Clayton was recently quoted as saying he was interested in Pandora Media, Sirius XM and Hulu as well. That has a Moody’s Investors Service executive raising an eyebrow.

“The company’s recent spate of cash and debt financed acquisitions does cause some concern over the company’s strategic goals as well as its desire to maintain moderate leverage, particularly if the company continues its pursuit of acquisitions in the near-term,” said Neil Begley, a Moody’s Senior Vice President. The company has not clarified its strategic objectives in making these acquisitions, and its new CEO has loosely mentioned his interest in buying other assets such as Sirius, Hulu and Pandora., Begley noted in a statement that Dish Network’s credit ratings remain under review following its announcement of a deal to acquire TerreStar Networks, a company that uses satellite services to delivery wireless terrestrial communications, for $1.38 billion.

“However, since the company is investing its cash in assets like wireless spectrum that clearly will retain or have the potential to grow in value, it softens our concerns about its acquisitive nature in recent months as compared to shareholder friendly activities,” added Begley.

Just what else has Dish been buying?

It paid $1.4 billion for DBSD, which like TerreStar is a satellite/terrestrial hybrid communications company. Also, like TerreStar, it was bought out of Chapter 11 bankruptcy.

In fact, Dish has done a lot of shopping in the federal bankruptcy courts. It won the bidding for Blockbuster at $320 million.

Even with all that buying Moody’s says Dish will still have more than $1 billion in cash on hand and leverage below three times EBITDA.

RBR-TVBR observation: It is worth noting that all three of the big acquisitions made thus far in 2011 were deals cut by Charlie Ergen before he brought Joe Clayton on as CEO. Clayton’s comments to the New York Times about being interested in Pandora, Sirius XM and Hulu don’t appear to indicate that any active pursuit is underway. Of the three, only Hulu is actively being shopped. Buying Sirius XM (Clayton was once CEO of Sirius) would provide a big payoff to Ergen’s chief rival, John Malone. And an acquisition of Pandora at anything close to its current trading price would not be accretive for many, many years, if ever.