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Dish on national security PR offensive against SoftBank

The sign in the lobby of the corporate headquarters of Dish Network is seen in the Denver suburb of Englewood, Colorado April 6, 2011. REUTE
The sign in the lobby of the corporate headquarters of Dish Network is seen in the Denver suburb of Englewood, Colorado April 6, 2011. REUTE

By Alina Selyukh and Liana B. Baker

WASHINGTON/NEW YORK (Reuters) - Dish Network Corp is ramping up its Washington-centric campaign to thwart Japanese firm SoftBank Corp's bid for Sprint Nextel Corp, hoping to convince lawmakers and government reviewers that it poses national security risks.

On Wednesday, Dish ads appeared in Washington publications the Washington Post, Politico, The Hill, Roll Call and the National Journal as well as online news sites, including Reuters.com.

A full-page color ad on the Post's A5 page compared SoftBank's proposed acquisition of Sprint to the 2006 Dubai Ports World controversy, when a political storm over national security unraveled a deal to buy several U.S. ports even after it was approved by federal national security reviewers.

"In an ever advancing world, 'ports' may change," Dish said in the ad, "but keeping them in American hands never should. Don't outsource our national security."

Multiple federal agencies, including an entity entirely focused on national security, are currently reviewing the national security and market implications of the $20.1 billion bid the Japanese mobile operator made last October for a 70 percent stake in the third-largest U.S. wireless operator.

Dish countered with its own $25.5 billion offer to Sprint in April and quickly launched into a public relations offensive to undermine SoftBank's standing with federal regulators, lawmakers and the public at large.

Dish's lawyers have left no stone in Washington unturned.

The Federal Communications Commission, which is one of the agencies reviewing the deal, has received scores of letters painting SoftBank as a risky foreign acquirer. Dish also briefed the staff of some members of the House of Representatives' Energy and Commerce Committee, and asked the office of Virginia Republican Morgan Griffith to pose a question about it at Tuesday's hearing on U.S. cybersecurity.

IMPORTANT FOR THE RECORD

SoftBank, which owns telecommunications networks in Asia, has pushed back against Dish's allegations that its ownership of Sprint would threaten the security of the critical U.S. telecommunications infrastructure or leak secrets to China.

But the political implications are starting to trickle out.

"I'm always concerned when we are putting our national infrastructure ... into the hands of foreign companies," Griffith, who asked a cybersecurity expert at Tuesday's hearing if the bid posed security threats, told Reuters.

"I mainly wanted to know whether there was a security issue. I thought it was important for it to be on the record," he said, adding that Dish accounts for hundreds of jobs in his district.

Mike McConnell, former national intelligence director, responded to Griffith's question that he would not be in favor of a U.S. communications company controlled by a foreign entity.

Griffith's office confirmed to Reuters that Dish, in briefing staff about the deal in April, asked them to pose the question at Tuesday's hearing. Griffith said he personally did not meet with Dish representatives on the Sprint bid and did not have immediate plans to follow up on the matter.

Dish earlier on Wednesday confirmed that it had briefed Commerce Committee members' staff on the deal but did not comment on the content of the briefings.

NATIONAL SECURITY CONCERNS

One of the Hill staffers who received a briefing from Dish said the company expressed concerns that if the FCC gave its approval to the SoftBank bid before Sprint shareholders choose which offer they like more, that would tip the scale in SoftBank's favor.

The FCC does not comment on ongoing deal reviews. Industry experts say the agency's ruling is unlikely to come before Sprint makes a final choice of buyer and the inter-agency Committee on Foreign Investment in the United States (CFIUS) completes its own review.

CFIUS reviews are highly secretive and weigh whether foreign ownership of a U.S. company poses threats to or increases vulnerability of the nation's infrastructure and assets. Although technically voluntary, foreign bidders prefer asking CFIUS to review their deals before completing them.

SoftBank says it is committed to using only network equipment that is acceptable to the U.S. government and will not use equipment from China's Huawei in Sprint's network. Dish has not made such promises.

(Reporting By Liana B. Baker in New York and Alina Selyukh in Washington; Editing by Andre Grenon and Andrew Hay)

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