TV Answer Man, I liked your article on how the new DIRECTV can succeed in a streaming world. But what about Dish? Let’s say Dish and DIRECTV don’t merge, is there a way that Dish can still survive in that world? Or will they have to go out of business? — Terry, Statesville, North Carolina. 

Terry, I agree with Dish Chairman Charlie Ergen that a merger between his company and DIRECTV is ‘inevitable.” In fact, it’s likely to happen in the next 12-18 months. And I think that by consolidating, the satellite TV operator  left standing will enjoy a profitable future for several more years thanks to cost savings and industry leverage created by the merger.

But let’s say the merger doesn’t happen. Can Dish survive in that scenario?

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The satellite TV service still has more than eight million subscribers and it remains profitable in part due to shrewd money management from Ergen and his team. But one of Dish’s main strengths — offering premium TV service to rural residents who can’t stream because of limited Internet access — could become a weakness in the next 3-5 years. The Biden administration, and private companies (including Dish’s 5G business), are moving fast to bring high-speed Internet to even the most remote areas of the country. And once that’s accomplished, many current Dish subscribers will be content to purchase a few streaming services for under $50 a month rather than pay $100 or more a month for Dish’s lineup.

Ergen, of course, has known this is coming, and was the first to launch a multi-channel streaming service, Sling TV, in January 2015. The live streamer now has 2.5 million subscribers, but has the potential to accumulate considerably more.

As for the satellite side of the company, Ergen will need to get even more creative in packaging channels, a difficult task with programmers demanding more and more money for their content. But Dish will need to compete with the live streamers in terms of offering thinner lineups at lower prices.

The risk in doing that, however, is that potential customers will see less reason to get a satellite dish. (We are already seeing that with Dish subscribers complaining about the satcaster not carrying regional sports channels, and other niche networks.). It’s not like Dish has a weapon like the NFL Sunday Ticket to keep subscribers from defecting.

Bottom line: Once the rural areas start to become less attractive for Dish, the company will likely be forced to drop the satellite service and focus exclusively on marketing Sling TV. This is why Ergen knows he will need that DIRECTV merger at some point. Otherwise, Dish will become a streaming/Internet company. Exclusively.

Terry, hope that makes sense. Happy viewing, and stay safe!

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— Phillip Swann