What happens if DIRECTV and DISH merge?
The DIRECTV-DISH merger is only in early-stage talks, but what would the merger mean? DIRECTV and DISH have been each other’s only serious satellite TV service rivals for years. A merger of the two providers would create a massive monopoly. With a combined 16 million subscribers and 99% coverage, a merged DIRECTV and DISH would be the largest TV provider in the country. Theoretically, without competition or regulation, the new company could charge whatever it wants for its TV packages.
Yes, that isn’t good for consumers, and we are supposed to have regulations protecting against this kind of thing. That’s why the Justice Department blocked the DIRECTV and DISH’s merger in 2002, according to Reuters. But that was more than 20 years ago. We’ve since seen monopolies or near-monopolies in big tech, media, pharmaceuticals, and other industries. We’re even looking at a potential supermarket monopoly, with Kroger and Albertsons considering hitching their shopping carts together.
That’s not to say the merger will happen. We’ll probably see lawsuits if DIRECTV and DISH get serious about things, which would at least bog down negotiations and perhaps help stop the merger altogether. But we have to wonder: Does it matter? Does satellite TV even have a future?
The Wrap reports that AT&T and EchoStar—DIRECTV’s and DISH’s parent companies—saw their share values increase by 7% and 2% on news of merger talks. But we don’t know if that’s such great news.
Even if DIRECTV and DISH merge, it won’t change the fact that streaming TV services keep gaining popularity while traditional cable and satellite TV service is in decline. Creating a single satellite TV service (with a lone customer base) won’t stop people from switching TV service types. So a DIRECTV-DISH merger doesn’t seem like much of a long-term survival strategy, even if bankruptcy is a looming possibility—and it is, for DISH.
Telecoms.com reports that the DIRECTV-DISH merger may happen this time because of DISH’s financial woes, which includes $2 billion in debt that matures in November. So, the merger could relieve DISH, which also plans to invest big in 5G wireless networks.
But, again, that’s probably not a solid survival strategy. It sounds like DISH and DIRECTV might be in the early stages of discussing a new telecom company with discounted bundles and everything. How novel.
We’re curious to see how everything shakes out. With talks being in the early stages, mergers tending to take time, and the virtual certainty that the DIRECTV-DISH merger will lead to lawsuits, there will be plenty of news to come. We’ll post updates as they happen.
