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DIRECTV-Dish Merger, Part 2

The word "SALE" with flames coming off of it

Q. I’ve been reading that DIRECTV might merge with Dish. Is that possible, in your opinion? I would be happy to see it as a DIRECTV customer for 10 years. AT&T is really, really bad. — Adrienne, Norfolk, Virginia. 

Adrienne, AT&T bought DIRECTV for $67 billion in 2015, but the deal has been a disaster for the telco.

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Since the purchase, DIRECTV has lost roughly two million customers. The spread of cord-cutting is certainly a cause, but subscriber dissatisfaction over DIRECTV’s annual price hikes, and AT&T’s uncertain stewardship of the satcaster, are factors as well. (Yes, Adrienne, you are not the only one who has complained about DIRECTV’s customer service since AT&T assumed control.)

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The idea of AT&T jettisoning DIRECTV has gained momentum in the last few weeks after a major AT&T investor publicly called for a company shake-up, possibly including the sale of the satellite TV service.

AT&T CEO Randall Stephenson yesterday dismissed talk of a DIRECTV sale during a presentation before a Goldman Sachs conference. He said the satcaster is integral to the company’s vision of delivering programming and telecommunications services in a variety of ways.

“We believe people are going to spend more and more of their day watching premium content and we expect people will also demand more bandwidth,” Stephenson told the industry confab.

But, of course, you would expect Stephenson to say that now. If AT&T was seriously considering selling DIRECTV, he would want to keep that secret to avoid looking like the company was panicking. However, the continued subscriber losses, and the outside calls for company change, will force AT&T to take some action.

So I think AT&T will explore a sale, if for no other reason to appease that major investor (the Elliott Management hedge fund). And if it considers a sale, the obvious partner would be Dish.

Dish is the nation’s second largest satellite TV service with slightly less than 10 million subscribers. (DIRECTV still has more than 18 million.) While Dish is also losing customers to cord-cutting, and the expansion of streaming options, the acquisition of DIRECTV would give it a total of 27 million satellite TV subscribers. That would make Dish the nation’s largest pay TV company. (And the number would reach 30 million when you add in Sling TV, Dish’s live streaming service, which has 2.47 million subscribers.)

With roughly 30 million subscribers, and no competition in the satellite TV category, Dish could stay profitable for years by generating more advertising, and pressuring programmers to offer lower carriage fees. (Think of it. Few programmers would want their channels suddenly removed from a pay TV service that reaches more than 30 million homes.)

Dish Chairman Charlie Ergen has said he’s open to a DIRECTV merger, but questions whether the federal government would approve it. He notes that the feds quashed a Dish-DIRECTV merger proposal 17 years ago on the grounds that it would be anti-competitive.

But the video business is dramatically different now thanks to the streaming revolution which gives the consumer more options and price points. The feds would be more likely to say yes.

Still, it’s never easy to bring two companies together, particularly when you’re dealing with Ergen who can be a contentious negotiator. So we’ll see. At this point, I would give the DIRECTV-Dish merger no better than a 50 percent of likelihood.

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Have a question about new TV technologies? Send it to The TV Answer Man at swann@tvpredictions.com. Please include your first name and hometown in your message.

— Phillip Swann

About TV Answer Man (1738 Articles)
The TV Answer Man is veteran journalist Phillip Swann who has covered the TV technology scene for more than two decades. He will report on the latest news and answer your questions regarding new devices and services that are changing the way you watch television.

3 Comments on DIRECTV-Dish Merger, Part 2

  1. Sheryl Stoner // September 19, 2019 at 2:24 am // Reply

    IF DISH DOESN’T BRING BACK FOX SPORTS SOUTHWEST A LOT OF SPURS FANS IN THE RURAL COUNTIES ARE GOING TO SWITCH. THE SPURS ARE THE ONE THING WE LOOK FORWARD TO OUT IN THE RURAL COUNTIES. IF DISH CAN’T OR WON’T PROVIDE THE GAMES I KNOW MANY WHO ARE ABOUT TO CANCEL SERVICE AND GO TO SOMEONE WHO WILL PROVIDE OUR GAMES.

  2. At t / direct TV sucks tried to go up in my bill 80 bucks saying they no longer offer promotions. I have been a customer since it began with prime star. 7 chanels and 3 pay. Then I think it switched over to direct TV in 1999 but customer service really sucks I hate talking to someone in the Philippines and can not understand some of them and they tell you that no one in America can help me. So to at t or direct TV you really suck.

    • What happened ?
      Did you finally get someone to give you your discount ?
      Customer Service does NOT SUCK,
      It does NOT EXIST. !!
      You DON’T win overseas.
      I heard something about if you ask for a US REP.
      They are required to transfer you, what happened to that ?
      I am also one of the ORIGINAL Customers,

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