Advertisement

Still big hurdles for a Dish-DirecTV merger

Share via

About 10 years ago, Dish Network and DirecTV tried to merge but regulators decided that a combination of the nation’s two satellite broadcasters would be anti-competitive.

At that time, one of the reasons given for blocking the marriage was that it would limit competition among pay-TV distributors. Now, a decade later, there are more options for consumers in the form of phone companies such as Verizon and AT&T.; Also, online platforms such as Netflix and Hulu have emerged as viable distribution systems.

Both companies still have some interest in pursuing a deal. On an earnings call earlier this month, Dish Chairman Charlie Ergen said, “obviously it is one of the things both companies have to consider.” DirecTV Chief Executive Mike White expressed that same sentiment as well at an investor conference last September.

Advertisement

But even though there are more players on the field, one analyst thinks regulators still would likely argue a DirecTV-Dish combination would tilt the game too much in one direction.

Guggenheim Securities analyst Shing Yin notes that Dish-DirecTV combination would reduce the number of pay-TV distributors from four to three in many big markets and from three to two in rural areas. Given that the government rejected the AT&T-T-Mobile; merger because it would reduce the number of players in many cities from four to three, it’s hard to see why it would flip-flop when it comes to Dish and DirecTV.

One big argument for a merger is that together Dish and DirecTV would have about 35 million subscribers, which would give it the clout to push back against rising programming costs. While that is certainly true, Yin wonders whether the Federal Communications Commission would embrace that aspect.

Advertisement

“It seems unlikely, in our view, that the regulator would choose to address this issue -- caused by programmers having too much market power -- by effectively transferring market power to the other side,” Yin wrote.

ALSO:

DirecTV reaches deal to carry Lakers channel

Advertisement

CBS, NBC and Fox battle Dish Network’s AutoHop

Follow Joe Flint on Twitter @JBFlint.

MORE

INTERACTIVE: TVs highest paid stars


QUIZ: Celebrity voice overs


PHOTOS: Hollywood back lot moments


Advertisement
Advertisement