As satellite TV tanks, Dish says merger with DirectTV is “inevitable”

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Dish Chairman Charlie Ergen the other day stated a merger with the AT&T- owned DirecTV is “probably inevitable.”

Dish, the second most significant satellite TV business behind DirecTV, lost 194,000 customers in Q4 2019 and ended the year with 11.99 million TV consumers. That consists of 9.4 million satellite TV consumers and 2.59 million consumers of Sling TV, Dish’s online streaming service. The satellite division lost 100,000 customers while Sling TV lost 94,000

On a revenues call the other day, a financial analyst asked Ergen for his ideas on a Dish/ DirecTV merger, keeping in mind that DirecTV is “in increased trouble” which the United States federal government appears to have “amenability to large-scale transactions.”

“We’ll start with Dish/DirecTV,” Ergen stated in action. “It’s probably inevitable that those two should go together just because the growth in TV is not coming from linear satellite TV providers. It’s coming from huge programmers, and trillion-dollar companies. So I think the regulatory environment, usually it’s behind the marketplace, but I think that becomes increasingly likely that that makes logical sense.”

Ergen added that a merger might deal with “regulatory issues.” However a Dish/ DirecTV mix would still “make some sense” due to the fact that of the competitive obstacle that streaming services posture to conventional pay-TV service providers like the satellite business. “You can’t swim upstream against a real tide of the over-the-top, big players,” Ergen stated. Looking For Alpha posted a records of the revenues call; audio is offered in a webcast.

Any merger would need to include AT&T, which purchased DirecTV for $485 billion in2015 , if a merger truly is “inevitable,” AT&T might make it occur by purchasing Dish or offering DirecTV..

When called by Ars today,

AT&T declined to comment. AT&T executive John Stankey stated in September 2019 that “DirecTV is an important part of what we’re going to be doing going forward.” Activist financier Elliott Management Corp., which has a $3.2 billion stake in AT&T, had actually slammed AT&T’s TV method and prompted the business to think about divesting DirecTV.

DirecTV still a risk, Dish says

AT&T had a dreadful 2019 in TV, losing more than 4 million consumers from its satellite, wireline, and direct streaming-TV services integrated. As we formerly reported, AT&T started 2019 with 24.49 million TV consumers and completed the year with 20.4 million. AT&T stated the consumer losses were triggered by a “focus on profitability,” as AT&T has actually raised costs and got rid of numerous advertising offers.

In spite of DirecTV quickly losing customers under AT&T’s ownership, Dish says the mix of AT&T and DirecTV still positions a difficulty. Dish composed in a filing with the United States Securities and Exchange Commission:

As a result of AT&T’s 2015 acquisition of DirecTV, our direct rival and the biggest satellite TV company in the United States now has actually increased access to capital, access to AT&T’s across the country platform for cordless mobile video, and the capability to more flawlessly bundle its video services with AT&T’s broadband Web gain access to and cordless services.

AT&T’s June 2018 purchase of Time Warner “further exacerbated” the threats to Dish by providing AT&T/ DirecTV “increased scale and leverage in the converging video, mobile, and broadband industries” and possibly “mak[ing] it more challenging for us to acquire access to Time Warner’s shows networks on reasonable and nondiscriminatory terms, or at all,” the Dish filing stated.

Dish likewise slammed AT&T’s zero-rating practice– in which specific online material does not count versus information caps troubled broadband service– stating that this “may give an unfair advantage to AT&T’s own video services.” However Dish might welcome zero-rating itself, as it will be completing versus AT&T in the mobile business over the next couple of years thanks to yet anothermerger Dish prepares to construct a 5G network with properties that T-Mobile and Sprint are being required to divest prior to combining.

Dish reported profits of $3.24 billion and net earnings of $389 million in Q42019 Income was below $3.31 billion year over year, however net earnings was up from $337 million in the year-ago quarter.

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