Charlie Ergen talking to DirecTV CEO about merger

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Charlie ErgenDish Network Chairman Charlie Ergen recently contacted DirecTV CEO Mike White to discuss a merger of the two companies, according to a Bloomberg story:


“Ergen made the approach in response to Comcast Corp.’s $45 billion acquisition of Time Warner Cable Inc. announced in mid-February, one of the people said, asking not to be identified discussing confidential information. White is reluctant to push forward with formal talks out of concern regulators may block the deal because the two companies directly compete with each other, another person said.”

The satcasters combined sales efforts for addressable advertising in January, allowing statewide political campaigns to target TV ads at the household level. The mutual technology delivers a customized audience for statewide races and issue-based campaigns.

The strategic relationship allows participating statewide political campaigns to target their TV ads at the household level within 20+ million DIRECTV and DISH homes. The DIRECTV-DISH arrangement will focus on political TV ads only, while the companies’ other media sales efforts will continue to operate independently.

DirecTV is the largest U.S. satellite-television operator, with about 20 million paying subscribers. Dish is No. 2 with about 14 million subscribers, and also has a spectrum portfolio that may be valued at almost $26 billion, according to Bloomberg. Dish has said it remains open to all options to monetize the U.S. airwaves, including building its own network or teaming up with an existing carrier, such as Verizon or AT&T.

“Given the rapidly changing industry dynamics, everyone should be talking to everyone, and if you’re not you might be left behind,” said Walt Piecyk, an analyst with BTIG LLC. “I highly doubt that DirecTV is the only company that Ergen has spoken with. This should serve as a reminder to AT&T and Verizon that a strategic asset has other options that could make Dish un-buyable in the future.”

November, 2012, Ergen said he wasn’t ruling out a merger with DirecTV and supporting a new, national wireless broadband network. Ergen was asked about it in his quarterly conference call and said the two satellite providers may consider it but are yet to hold formal discussions.

Ergen tried to merge the companies in 2002, but regulators rejected the deal. “If the deal makes sense, they approve it. If it doesn’t, they put conditions on it to make it make sense. Or if it really doesn’t make sense, then they just don’t approve it,” Ergen said in 2012. “My personal opinion is this is probably a doable deal no matter who the administration is, under certain circumstances.”

“We aren’t surprised that the two CEOs would discuss a deal,” James Ratcliffe, an analyst at Buckingham Research Group, told Bloomberg. “Ergen has made it clear in the past that he believes a combination with DTV would create significant value (and we agree), so the fact that he approached DTV CEO Mike White wouldn’t surprise us.” Still, Ratcliffe wrote, “we remain skeptical” because of prospects for a “difficult regulatory approval process.”

“There is obviously a business case that makes a lot of sense for consolidation in the satellite industry,” Ergen said in November, before the Comcast-Time Warner Cable deal was announced. “You’re going to see consolidation, maybe first in the cable industry. You’re seeing in the government’s part that they do negotiate things within the airline side, so it makes a lot of sense,” Ergen said, referring to the U.S. government’s willingness to negotiate on antitrust issues in the airline industry.

“While I certainly believe our industry has changed substantially and I believe there are a lot of reasons why consolidation in our industry would be pro-consumer to try and improve the balance between programmers and distributors, you still have to go sell that in Washington,” White said in December.

See the Bloomberg story here.

RBR-TVBR observation: Hey, Sirius and XM Satellite Radio were allowed to merge and now have a monopoly on satellite radio. What is so different here, given that the two largest cable MSOs are about to be allowed to merge? So, first it’s Comcast merging with Time Warner Cable; now comes news that DISH might merge with DirecTV. Meanwhile, FCC Chairman Tom Wheeler is obsessing over some little local TV stations selling ads for other little local TV stations. Broadcasters have these “sharing arrangements” because of insanely outdated FCC media ownership rules that punish broadcasters – and ONLY broadcasters. These sharing arrangements help preserve LOCAL television. They help preserve LOCAL news. They help preserve LOCAL advertising. One has to ask: Is the FCC living in an alternative universe, or does Chairman Wheeler simply want to drive TV stations out of business and into the spectrum incentive auctions?


2 COMMENTS

  1. A DISH-Direct TV merger would be a different kettle of fish than Sirius/XM. The latter compete with local terrestrial radio stations for listeners (among other services) in any given market (at least where there are people), and there usually are at least several such competitors. DISH and Direct TV compete, for the most part, only with a single cable operator in any given market (there isn’t much in the way of “second cable” service in most markets). A merger of DISH and Direct TV would thus have a far greater negative impact on competition in any market for MVPD service.

  2. I have both Comcast Cable and Dish at my house. Comcast for VOIP and Internet with Dish for TV. I’ve tried to rely on Comcast for video service and the service is not nearly as good and or reliable as Dish. So for me, there is not a choice, DISH Network…. Go Charlie.

    Now how would I feel about Dish & Direct TV joining up…. ahhhh not really happy knowing how much more expensive Direct is after year one of the contract. I trust Dish, not so much with Direct. So if Charlie and company want to merge… fine…. but let’s make sure that the Dish people are in charge of the pricing scale and operations.

    I want to know for sure what it’s going to cost today and tomorrow before beaming down the signal.

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