How do you kill a rumor that makes so much sense? I am talking about the possible talks between T-Mobile's (TMUS) John Legere and Dish Network's (DISH) Charlie Ergen to create one giant uncarrier-untelevision company. The alleged discussions have both stocks roaring today.
The background: Last night The Wall Street Journal reported these two titans were talking about a combination. To be fair, this possibility has been chronicled endlessly by both David Faber and me through interviews with John Legere and Ergen, with whom Faber has a long-standing relationship.
The merged company would be a compelling entry. Dish has lots of spectrum that's needed for a big phone company and it obviously has the television feed. T-Mobile is the most aggressive carrier out there with the fastest growth, but a critical spectrum shortage.
Legere is a rebel with a cause, aspiring to have having the best phone company on earth. Ergen is a big thinker who has always tried to make DISH into a powerhouse. Both men are comfortable being in uber-deal mode. Neither man has ever denied that they like each other. Both have talked about the advantages of a combination in, admittedly, abstract terms.
The rally in T-Mobile and DISH isn't the only evidence of something happening. We are seeing ancillary signs that a merger might be imminent. The tower stocks, American Tower (AMT), SBA Communciations (SBAC) and Crown Castle (CCI) are roaring. They have been underperformers of late because the big carriers seem to have slowed spending. But if you pair the spectrum-rich DISH with the spectrum-shy T-Mobile, you would need all the tower space you can get to do a nationwide build-out.
In the end, I think what the market is saying with this advance is there is an inevitability to the talks that makes them undeniable.
I tried to get John Legere on the Squawk on the Street this morning with a 4:20 a.m. invitation on Twitter. He shot back that it was his birthday and he had nothing to say but that if he were going to it would be with us.
That was after he seemed disparage someone who asked, in a tweet, if the talks were for real. Legere's tweet, which I do not think was meant to throw cold water on the talks but was meant to tweak the tweeter, was later on taken down. People are interpreting Legere's deletion as meaning the two principals are indeed talking about merging.
In a counter-tweet I wished John a happy birthday and hoped he got a two-a-day exercycle workout -- he often tweets of his love of spinning -- and that was that.
I wish it weren't, though. I happen to know that John was supposed to come to New York today and didn't, but that could be for any number of reasons.
What's most important here is that when you see two stocks go up on takeover talk in this environment and then don't go down after the talks are basically characterized as a tad evergreen and not urgent, there tends to be fire with the smoke.
Think about all of the deals in the pharma and the food and the telco and cable spaces. The stocks involved in these deals invariably ran up ahead, exactly like T-Mobile and DISH are doing now.
That means to me that the leak is legit and if Ergen and Legere can come to terms you are going to have a new colossal uncarrier dog with a television tail. Sure, they might not be able to agree on price and that could derail any deal. That was supposed to be the sticking point in a Microsoft (MSFT)-salesforce.com (CRM) tie-up.
But if recent history is a guide, the smoke before the fire is thickening and I haven't seen this much smoke since immediately before the Charter Communications (CHTR)-Time Warner Cable (TWC) deal. And that deal was just as inevitable as this one seems to be right now.