If DirecTV and Dish want to merge again, antitrust issues haven’t stopped them

DirecTV and Dish Network are again in talks to merge, the New York Post has learned. This comes after years of wrangling and multiple antitrust crackdowns from the government.

Satellite TV giants tried to merge two decades ago, but the FCC and the Justice Department’s antitrust division stopped them. A few years ago, the DOJ told executives not to make a deal because they were worried about the start of 5G, sources say.

There are now more insiders who think a Dish-DirecTV deal could pass regulatory muster because concerns about the struggling companies’ market power have lessened, sources say. This means that the deal could go through. Some executives also say that a merger could give a big boost to the US’s slow rollout of 5G wireless services.

John Stankey, the CEO of AT&T, wants to merge his DirecTV stake with Dish’s, which could help pay for a new 5G alternative, sources say.

Talks between the satellite TV companies are being pushed forward by TPG Capital, according to sources who know the situation. TPG bought 30 percent of DirecTV from AT&T last February in a deal that gave the company a value of $16.25.

Conversations are being led by TPG. Sources say they want their money back.

But Dish Chairman Charlie Ergen, a former poker player who is known for being hard to get a deal done, appears to be holding up the deal, sources say. He wants a lot of voting shares and a say in important decisions at the combined company, even though he’s only a minority owner.

As a source said, “They’re having talks and trying to figure out the details.”

Installation of 5G equipment in Utah

There will be more of this in the future: On a tower in Utah, a Verizon contract crew instals 5G telecommunications equipment.

Officials from DirecTV and Dish Network did not respond to requests for comment. TPG declined to comment as well.

Ergen has always believed that a deal is “inevitable” and that the only difference is “time,” whether it takes a decade or a day. The combination of the two might save $1 billion in costs. Given the situation of the satellite TV industry, Ergen may have no choice but to reach an agreement, as both providers continue to lose subscribers.

“I wouldn’t want to be a CEO gambling with the DOJ right now,” one antitrust expert told The Washington Post on the condition of anonymity. “The political climate is quite difficult.”

Nonetheless, sources close to the agreement feel that both firms are under such duress that the DOJ will see the necessity to merge. According to business papers, DirecTV now has slightly over 15 million subscribers, down from more than 25 million in 2017. Dish now has 8.4 million subscribers, down from around 13 million in the past.

“They’re coming together because it makes perfect sense,” a source close to the negotiations adds. “You can’t argue there is an antitrust concern because both are declining, dying networks.”

Dish Network Chairman Charlie Ergen speaks during Google's annual developers conference in San Francisco, California May 20, 2010. Dish Network Corp, the No. 2 U.S. satellite television provider, on April 15, 2013 offered to buy wireless service provider Sprint Nextel Corp for $25.5 billion in cash and stock, a move that could inspire other telecommunications or video companies to consider their own prospects of combining.
Chairman Charlie Ergen of Dish Network may be hesitant to finalise a transaction quite yet.

According to two sources close to the situation, the DOJ’s antitrust division told AT&T executives in 2020 that a merger between DirecTV and Dish would have to wait until faster 5G wireless service is more widely available in rural markets. Regulators were afraid that a combined business would raise satellite television fees.

However, a recent US infrastructure plan includes $65 billion for rural internet expansion. As more Americans in rural regions have access to faster internet, they may opt to cut the cord and purchase streaming packages, putting satellite providers on the defensive.

According to some insiders, the question is whether regulators will reject a merger between the two dominant satellite operators before or after broadband infrastructure is established in rural areas.

“Both the FCC and the DOJ would probably conclude that having one powerful satellite competitor is preferable to having none at all — and the future is not too bright even together, let alone alone,” telecom analyst Craig Moffett told The Washington Post.

Meanwhile, the 5G rollout in the United States is well behind schedule. Following recent complaints from the Federal Aviation Administration, AT&T and Verizon have agreed not to enable 5G service around 50 airports this month. The Federal Aviation Administration is concerned that 5G antennae will interfere with flight equipment.

DirecTV logos

TPG controls 30% of DirecTV, giving it a market capitalization of $16.25 billion.

According to some reports, allowing AT&T Chief Executive John Stankey to merge the telecom giant’s 75% DirecTV ownership with Dish might help fund a new 5G alternative solution.

Meanwhile, Dish has committed to building a 5G network that would cover 20% of the US this summer and 70% of the US by summer 2023. Over the last two years, Dish has invested in 5G technology but has yet to cover a single city. The FCC could force Ergen to give up his 5G spectrum if he doesn’t achieve the buildout standards.

While Ergen appears to be in a pickle, insiders told The Post that he has a history of blowing deals. “He’s left a trail of almost-completed deals — you can’t be sure it’ll get done until the ink is dry.”

Nonetheless, a source close to Ergen said that he is becoming increasingly “desperate” and “needs the money.”

Another insider claimed, “They’re really close.” “It’s complicated, but it’ll definitely happen.”

About the author

Akanksha Jain

Akanksha Jain love to learn new stuff every day. With a background in computer science and a passion for writing, she loves writing for Startup, Business sections of Editorials99.

Add Comment

Click here to post a comment