Wireless upstart T-Mobile is said to be in talks to merge with the satellite broadcaster Dish Network, according to a report Wednesday night.
The Wall Street Journal report, citing sources with knowledge of the talks, says that under the terms of the proposed agreement, T-Mobile CEO John Legere would act as CEO of the new company, while Dish's CEO, Charlie Ergen, would act as chairman of the board.
Sources cited in the WSJ report provided no information on the financial terms of the deal. It's likely to be big. Dish has a market capitalization of about $33 billion, while T-Mobile has a market cap of $31 billion.
One WSJ source characterized the deal talks as in the "the formative stage." The lawyers will have to squabble about the mix of cash and stock needed to pay for the deal, and that process could easily derail.
The deal makes a lot of sense, however.
Dish has long harbored ambitions to play in the wireless services space. Along with two other companies, Dish paid $13.3 billion for wireless spectrum in a government auction earlier this year. Only AT&T spent more, at $18.2 billion.
But Dish never built a wireless network, and arguably lacks the experience to operate one. The spectrum could immediately be put to use to improve the speed and reach of T-Mobile's existing network.
Also, Dish is said to lack a robust broadband network, and could use T-Mobile's existing network resources to bolster that service. Pay TV providers rely on selling high-margin broadband services to keep their businesses afloat, as margins in the TV distribution business are increasingly tight.
The coupling of a telecom player and a satellite provider is certainly nothing new. AT&T is in the process of buying DirecTV for $49 billion, creating the largest pay TV company in the U.S. Unlike AT&T, however, T-Mobile doesn't currently offer its own pay TV service, as AT&T does with U-verse.
And Charter Communications recently announced a $66 billion deal in which it would acquire both Time Warner Cable and Bright House Networks, creating the second-largest cable operator in the U.S.
The dance floor seems to be full of traditional content distributors, arms open wide, each searching for a dancing partner to help weather the threat of new-ish Internet distributors like Amazon and Netflix.