Dish 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.
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?