Struggling satcasters DIRECTV and Dish have engaged in new merger discussions, according to an article by The New York Post.
The two companies have lost millions of subscribers over the last several years and a merger could be the only viable option to keep a satellite TV service in business in future years. The Post reports that TPG, a private equity firm that owns 30 percent of DIRECTV, is pushing for the merger to recoup its investment. AT&T, which owns 70 percent of DIRECTV, sold the minority stake to TPG a year ago.
“TPG is driving the conversations. They want their investment back,” the article states, citing a source close to the situation.
DIRECTV and Dish have been on-and-off rumored merger partners for years and actually successfully negotiated one merger two decades ago. However, the FCC nixed the deal on grounds that it would be anti-competitive.
The Post quotes ‘insiders’ as saying a DIRECTV-Dish merger now would likely have a better chance of winning federal approval. The video industry is packed with streaming competitors and concerns that a satellite merger would hurt rural residents has been somewhat alleviated by President Biden’s recent infrastructure initiative which designates $65 billion to expand Internet access in rural markets. (Many rural residents now are restricted to satellite as a TV option due to limited Internet availability.)
Despite Dish Chairman Charlie Ergen frequently calling a DIRECTV-Dish merger “inevitable,” the Post article says Ergen may be dragging his feet on this deal. The Post says Ergen is pushing for greater influence over who would sit on the new company’s board as well as who would run the operation day-to-day.
“They’re actively having conversations and trying to iron out the details,” a source told the Post.
The article suggests that Ergen would hold a ‘minority position’ in the new company if a deal is reached.
“(Ergen’s) left almost-consummated deals in his wake — you’re not confident it will get done until the ink is dry,” the Post quotes one source, but adds that Ergen is in “an increasingly desperate position and needs the money” for Dish’s 5G communications plans.
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