Report: Dish and DirecTV Are Discussing a Merger

Mar 27, 2014  •  Post A Comment

In response to Comcast’s planned $45 billion merger with Time Warner Cable, Dish Network Chairman Charlie Ergen recently talked with DirecTV CEO Mike White about merging their two satellite-TV companies, reports Bloomberg.

“White is reluctant to push forward with formal talks out of concern regulators may block the deal because the two companies directly compete with each other,” Bloomberg reports, citing a source who’s familiar with the situation.

DirecTV is the biggest satellite-TV operator in the U.S., with 20 million customers, while Dish is No. 2 with 14 million subscribers, the story notes. The report adds: “Dish has said it remains open to all options to monetize the U.S. airwaves, including building its own network or teaming up with an existing carrier, such as Verizon Communications Inc. or AT&T Inc.”

The key to approval for a merger between the two companies is how regulators view the market. For instance, if they include online services such as Netflix as a competitor, then the deal might be more likely to pass, the story notes.

“Even if regulators allow Comcast’s acquisition of Time Warner Cable, DirecTV management doesn’t see the cable deal as a proxy for an approval of a deal with Dish," Bloomberg reports. "DirecTV and Dish’s 2002 attempt to merge was blocked by regulators."

Buckingham Research Group analyst James Ratcliffe wrote in a report: “Ergen has made it clear in the past that he believes a combination with DTV would create significant value (and we agree), so the fact that he approached DTV CEO Mike White wouldn’t surprise us.”

Ratcliffe added that he remains skeptical because of the potential for a “difficult regulatory approval process.”

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