By Phillip Swann
The TV Answer Man – @tvanswerman
TV Answer Man, I thought that DIRECTV and Dish were going to merge by now. Is this still happening? What is taking so long? — John, Parkersburg, West Virginia.
John, a possible satellite TV merger between DIRECTV and Dish has been the topic of discussion for years regardless of who owns either company or how they are doing financially. As Dish Chairman Charlie Ergen has said repeatedly, including as recently as last November, it seems inevitable that the two companies will become one because of the synergies and benefits a merger would bring, particularly now with both rapidly losing subscribers due to cord-cutting and high programming prices.
John Stankey, AT&T’s CEO, was asked last week about a DIRECTV-Dish merger during the company’s first quarter analyst call. Stankey deflected the question as best he could.
“I’ve never really commented on my point of view of what the calculus is and the combination of DIRECTV and Dish, and I don’t expect to do that today,” Stankey said.
You could interpret Stankey’s comments in multiple ways. There are merger negotiations, but he doesn’t want to talk about it. There aren’t any negotiations, but there could be at some point. There won’t be a merger, but Stankey prefers not to comment on internal company discussions.
However, it would seem likely that the two companies have discussed a merger, at least informally, considering Ergen last November also suggested a deal could happen sooner than later.
“You’re hesitant to be a political football for somebody to complain about big companies or whatever in an election cycle. But that election cycle is over next week. And then you have a window, where I think all companies are looking at M&A,” Ergen told financial analysts in November.
Ergen added: ““If the timing (of a DIRECTV-Dish merger) was right, it would be in the near term, not the longer term.”
Well, it’s more than five months after the election with no merger in sight. Other than Stankey’s no-comment comment, both Ergen and AT&T, which owns 70 percent of DIRECTV with private equity firm, TPG, owning 30 percent, have said little or nothing about the possibility.
What is going on? Why hasn’t this merger happened?
It might be because something happened one month after Ergen’s November comments. The Federal Trade Commission sued to block Microsoft’s $69 billion deal to buy Activision Blizzard. The government agency claims the deal would hurt competition in the video game industry.
Legal experts say the FTC’s bid has a so-so chance of winning in court, but FTC head Lina Khan proceeded with the case to make a statement to big technology companies that the Biden administration is looking over their shoulder. Khan and other government officials of both parties have frequently criticized ‘Big Tech’ for what they call anti-competitive practices.
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Since the satellite industry hardly falls into the category of ‘Big Tech’ these days, Ergen and AT&T/TPG could be waiting for some indication that the FTC would view a Dish-DIRECTV merger differently. The Dish chief has noted previously that the possibility that the federal government would try to block the deal is a major concern.
The FTC this month dropped a lawsuit to block Meta’s acquisition of a virtual reality company when it became apparent it would lose so Khan’s team is not impervious to political realities. The satellite executive teams could be hard at work behind the scenes to set the stage for a successful merger.
This is speculation, of course, but the fact that an inevitable merger hasn’t happened when one participant openly said five months ago it might happen soon tells you that something changed the thinking. And the FTC’s lawsuit against Microsoft/Activision would seem like a good bet.
John, hope that helps. Happy viewing and stay safe!
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— Phillip Swann