U.S. satellite-based pay-TV operators Dish and DirecTV have oft been the speculation of a merger, with politics and government regulation impeding a deal. But with the satellite TV market continuing to decline due to ongoing consumer migration toward over-the-top video, the competing companies reportedly are keen again to consummate an agreement.
Indeed, DirecTV has seen a 40% drop in subscribers to 15 million from 25 million subs in 2017. Dish ended its most-recent fiscal period with 8.4 million subs — down from almost 9 million subs in the year-ago period.
DirecTV parent AT&T last year spun off a minority stake (and operational control) of the satellite operator, online platform AT&T TV and cable service U-verse to private equity firm TPG Capital for $8 billion. The consolidated companies were then rebranded DirecTV Stream.
“TPG is driving the conversations. They want their investment back,” a source close to the negotiations told The New York Post.
Dish founder/CEO Charlie Ergen has long advocated for a merger of the two companies — albeit on his terms.
“In terms of DirecTV and Dish, I mean obviously I think that those two companies go together, that’s inevitable,” he said on Dish’s most-recent fiscal call.
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Ergen believes that in the current market, regulatory concerns have been minimized due to the continued rollout of broadband nationwide and ongoing competition from programmers themselves launching streaming platforms. In 2020, the DOJ reportedly quashed a merger between DirecTV and Dish, citing 5G’s sputtering rollout nationwide.
The next-generation wireless format is seen as a competitive alternative against any possible satellite TV market control DirecTV and Dish might wield.
“I think it’s a timing issue more than anything else,” said Ergen, who reportedly wants a seat at the head of the table of the merged distributors.
Regardless, with satellite distribution dying in the U.S., a combined DirectTV/Dish unit would be preferred, especially for rural and RV customers dependent on satellite service.
“The FCC and DOJ would likely both conclude that having one strong satellite competitor is better than none at all — and the future is not terribly bright even together, but especially alone,” Craig Moffett, analyst with MoffettNathanson, told The Post.