H-Block Auction Likely to End This Week With Dish Network as Winner, Observers Say
A slight slow-down in bidding may indicate the H-block auction may soon come to a close, some analysts said. Provisionally winning bids totaled $1.535 billion as of Friday, which is gaining ground toward Dish Network’s bid commitment of $1.564 billion.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Dish will always make at least one bid and will keep bidding until the auction hits the exact reserve price, said Tim Farrar, an independent mobile satellite services analyst. “But how many rounds we have depends on whether there’s someone else involved,” he said. “At this point, it’s pretty much all over and likely to finish at the reserve price and the only question is whether the other bidder keeps going for the sake of it or gives up more quickly.”
"It feels like it’s in its latter stages,” said Jeff Silva, an analyst with Medley Global Analysts. “There is some sense that activity is leveling out.” It’s hard to imagine any other outcome than Dish winning big in the H-block auction, he said. “I think everybody would be shocked if the narrative comes out different than that,” he said. “My sense is they want to get as many licenses as possible with that $1.56 billion, which means they want to get the biggest bang for their buck."
Dish seems to have initially bid cautiously, said economist Coleman Bazelon of the Brattle Group, who doesn’t have a client bidding in the auction. Dish likely didn’t start off bidding on every license in the auction, or “raising their own bids willy-nilly to get to $1.56 billion,” he said. “There are other bidders in the auction and some of them are folks who are savvy enough to be able to look for bargains,” like investor Mario Gabelli and Leap Wireless, he said. “What’s probably happening is, there are bidders looking for bargains and they're bidding on a small number of licenses at a time and then Dish would come back and outbid them,” he said. Whether that stops when the reserve price is reached is unknown, he said: “It stops when that speculator stops bidding."
It appears that the competition has given up its attempts to outbid Dish, said New Street Research analysts in a research note (http://bit.ly/1c8HQjz). The denser markets, especially New York City and Chicago, haven’t seen more than one bid in a round since the first round, “suggesting that Dish has been bidding against itself, and that the competition has insufficient capital to compete,” it said. “At the current pace of bid increases, we would expect the auction to reach the reserve bid” sometime early this week, it said.
There seems to be one small bidder that’s testing license by license or testing by small amounts at a time, Bazelon said. “At the end of day they would only be able to buy a few licenses that they thought were bargains.” That’s most likely why the auction has been playing out at a slow pace, he said.
"It’s possible that someone might view that there’s a holdup benefit in trying to win one particular license just so that Dish doesn’t have absolutely everything,” Farrar said. But if that’s the case, “then things will go very slowly,” he said. “The only question is whether someone stays in it to win one small license. ... That probably isn’t terribly appealing."
Bazelon also said whatever the price paid in total or for any given market “will not be a good comparable price point to inform what other spectrum is worth” in upcoming auctions.