TV Answer Man, I got excited when I saw AT&T and Dish had done a big deal for Dish’s wireless business. I thought it meant the companies were merging, too, which would mean DIRECTV. So do you think the wireless deal is just the beginning? Will this lead to a DIRECTV merger? — Tom, Charlotte.
Tom, AT&T and Dish announced last week that they had signed a multi-billion dollar pact to bring AT&T’s wireless service to Dish’s wireless customers. The agreement means that AT&T will replace T-Mobile as Dish’s primary wireless partner.
While the deal has nothing to do with DIRECTV, or any other AT&T-owned business, such as Warner Media, it has some analysts buzzing that it could lead to a satellite TV merger between the companies.
Jonathan Chaplin, an analyst at New Street Research, wrote in a note to his clients that one suspected reason why DIRECTV and Dish haven’t merged is that “AT&T hates Dish.” CNBC reports that Dish abruptly halted negotiations to sell its satellite TV service to the telco in 2007 and that AT&T’s executive team has held a grudge ever since.
But AT&T is now run by John Stankey, not Randall Stephenson, who was the CEO during the 2007 negotiations. And Stankey is clearly taking the company in a different direction, selling a 30 percent stake in DIRECTV to private equity firm TPG, and a similar minority slice of Warner Media to Discovery. (The TPG deal is expected to close in the next few weeks while the Warner-Discovery sale will likely conclude next year.)
I will concur with Chaplin, and others, that the AT&T-Dish wireless agreement could only be the beginning and ultimately trigger a Dish-DIRECTV merger. While the companies might wait a year or so to improve the merger’s chances with federal regulators, it’s probably ‘inevitable,’ as Dish Chairman Charlie Ergen has said on multiple occasions. The synergies that would come from a merger are too overwhelming to ignore, particularly as both satellite services lose more subscribers to cord-cutting and streaming.
Tom, hope that helps. Happy viewing, and stay safe!
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