Dish Network Weighing Another Attempt at DirecTV Merger?
Satellite TV provider Dish Network is considering another attempt to merge with rival provider, DirecTV. No formal proposal has been made. However, representatives have had general discussions about the idea during recent months. Speculation that a move may be made has increased as Dish Network reported a loss in subscribers this past Monday. They have announced that they are considering "a major strategic shift" which may involve a revived deal with DirecTV.
In 2001 the two statellite companies attempted a deal. At that time, Dish tried to acquire Hughes Electronics, owner of DirecTV at the time. However, due to regulatory opposition the deal was abandoned. Dish Network's Chairman, Charles Ergen thinks the current competitive environment may be more receptive to the merger.
Won't fool Feds.
Such a merger may benefit shareholders, but not consumers. Lately Dish has lost market share to DirectTV because of HD channels. This type of fierce competition is what compels both companies to improve quality and lower prices. Without any competition Sat TV would have no reason to offer more, or charge any less than cable.
Six years removed from failing at a $16 billion tie-up, Dish Network Chairman and CEO Charles Ergen has said market conditions are more welcoming to a deal, according to a report in The Wall Street Journal. Ergen has reportedly calculated the potential savings of a merger at up to $2 billion a year, and he also harbors hopes of a potent broadband offering from a combined satellite company -- something neither has been done individually. However, a renewed bid to combine Dish and DirecTV would revisit the same problems that plagued the 2002 attempt -- and would once again fail to pass muster with the Federal Communications Commission and the Justice Department, the government bodies that would again examine the merger. In its October 2002 decision, the FCC said a combination of Dish Network, then under the umbrella of parent EchoStar(SATS - Cramer's Take - Stockpickr), and DirecTV, which was then owned by Hughes Electronics, would likely harm consumers by eliminating a viable competitor in every market, creating the potential for higher prices and lower service quality, and hurting future innovation. http://www.thestreet.com/story/10432...fool-feds.html
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