The U.S. Department of Justice recently advised AT&T that a merger between DIRECTV and Dish would likely not be approved until 5G wireless service is available in rural markets, The New York Post reports.
The newspaper writes that DOJ regulators believe the merger would deny rural residents a choice in TV providers. Cable TV is not available in many rural areas, leaving DIRECTV and Dish as the sole pay TV operators there. In addition, many rural residents do not have access to high-speed Internet, removing streaming as an alternative.
5G wireless technology, which promises unprecedent Internet speed and coverage, could help bridge that gap. But it may be a few years before it’s available in most rural markets.
“Regulators with the DOJ’s antitrust division recently informed executives of AT&T that a marriage between DirecTV and Dish would likely have to wait until faster 5G wireless service is more widely available in rural markets, two sources close to the situation said. Regulators remain concerned that a union could lead to higher prices in areas lacking high-speed Internet access, including tribal lands, these sources said,” the Post article states.
The Post does not name the regulators, and it would be somewhat unusual for the federal government to deliver such a warning to a private company in advance. But the Post, and other news organizations, such as the Wall Street Journal, have previously reported that AT&T is contemplating selling DIRECTV to a company besides Dish, perhaps an equity firm like Apollo Global Management. The multiple reports indicated that AT&T has concerns that a Dish-DIRECTV merger would win federal approval at this time.
“AT&T, meanwhile, doesn’t want to wait around for a DOJ review only to be told no, especially after being forced to wait 20 months to close on its $85 billion merger with Time Warner,” the Post writes.
A DIRECTV-Dish merger attempt was nixed by the Federal Communications Commission in 2002 on grounds that it would hurt consumers.
Dish Chairman Charlie Ergen is known as a difficult negotiator, which could also be influencing AT&T’s thinking.
Ergen has said repeatedly that he believes a merger between Dish and DIRECTV is inevitable, but he has acknowledged that the timetable for a deal is uncertain.
The Post writes that AT&T and DOJ refused to comment for its story.
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— Phillip Swann