DirecTV CEO: "Never Say Never" To A Merger Deal With Dish Network
This was a lousy day for DirecTV after it reported lower-than-expected earnings, with especially weak results in Latin America. But CEO Michael White gave investors at least one reason to stick with the company: He signaled in a call with analysts that he'd be receptive to the idea of a merger with Dish Network. "I don't think it's productive for me to speculate what regulators may or may not do, but the competitive landscape is very different than it was 10 years ago" when the FCC rejected a Dish-DirecTV merger plan, he said.
For one thing, "the balance [of power] between content distributors and providers is out of whack." He has long charged that programmers are demanding dangerously high new fees for their content -a position he reiterated today. "I've seen more customer complaints about the price increases," he says. "My own view is that it's not going to change in the short term. But it's clear that this isn't sustainable beyond the next couple of years. Something is going to have to give."
If Directv and Dish merged and then tried to raise prices because there was now no competition for "satellite TV", they'd lose a lot of subscribers in the areas where people have many options.
Without knowing the absolute breakdown (not just wild ass guesses) losing a few more of the subscribers who have more choices may be made up by the extra they charge those with limited choices.
The areas with the most competition can be the hardest to serve. Areas served by multiple providers may be the hardest to find a location for a dish. So the satellite companies can write off areas that are hard to serve and make more money on the relatively easier rural installs.
Customers are expensive ... spending $800-$900 to acquire a customer who may leave you in two years for the competition. The profit per customer isn't very high. The best deal (for the company) would be to get customers who have limited options and eliminate the competition.
No more flip-flop between DISH and DirecTV in rural (non-cabled) America. A sweet dream for the owners of both companies.
slice1900 said:
Satellites aren't cheap, but you need the same number of satellites whether you have 1 million subscribers or 100 million, so the more subscribers the better so the 'per subscriber' cost of building/launching/operating the satellites is reduced.
Obviously they'd be stuck with the cost of operating both satellite fleets for a while, since they can't switch everyone over to Directv overnight.
The savings would only come in the next round of satellite purchases and then only at the cost of replacing every receiver of the company changing technologies to match the other. New satellites might be cheaper.
I understand that a rural only provider cannot work, however in any case, the FCC should make some provision for price controls in areas where there is no competition. Either that or the government helps to subsidize the cost where there is no competition.
I think the point is, because Directv and Dish both have "national pricing" rather than local pricing, the need to compete in areas where there is significant competition will keep the rural prices in check. Now, if they started a zip by zip pricing system, there would be an argument the customer is not protected in rural areas, but I don't see that happening.
I'm sorry, but those concepts are anathema to free markets- we've still got some left!
And that is why the programmers are raising the prices of their content out of reach, and our bills have become so inflated. If the FCC and Justice Department would have stepped in over the past few years and stopped all of the mergers and consolidations of the program providers, the distributors wouldn't be scrambling to merge and continue to raise our rates out of reason. Soon there will be one distributor and one content provider called "Media." Just look at the shrinking landscape of local TV, Sinclair, Media General, Nexstar, and Gannett are buying everything up, this is going to do nothing but make the retransmission consent fees for local stations go through the roof.
The percentage of households whose only choice is satellite is no where near enough to sustain a DBS provider. They will have so make their money in the big DMAs...which means they will have to deal with lots of competition.
I believe their pricing will have to based on the big markets and not the little ones without competition.
I think the point is, because Directv and Dish both have "national pricing" rather than local pricing, the need to compete in areas where there is significant competition will keep the rural prices in check. Now, if they started a zip by zip pricing system, there would be an argument the customer is not protected in rural areas, but I don't see that happening.
I have Dish AND DirecTV. I would be unhappy if they mutated into a single provider unless they somehow managed to keep all the unique features each has on a combined service.
I really like having BOTH, and think more people should try it.
If there were ever a merger (and I don't think it would pass muster with the FCC and other agencies) there would be no merging of the services...DirecTV and Dish subscribers would continue to use seperate receivers and different dishes pointed at different satellites, for at least a decade, probably longer.
The days when a merged company could proactively migrate to a single transmission platform are long gone. Both subscriber comunities are way too large to make migration economically feasible. The most that would happen is that they would de-emphasize one service or the other and simply stop manufacturing that type of receiver.
The benefit to the companies from a merger would be economies of scale in accounting, legal, customer support and, most importantly, content negotiations. A DirecTV/Dish merged entity would be the largest multi-channel operator in the country and would, therefore, have more leverage with the networks.
If there were ever a merger (and I don't think it would pass muster with the FCC and other agencies) there would be no merging of the services...DirecTV and Dish subscribers would continue to use seperate receivers and different dishes pointed at different satellites, for at least a decade, probably longer.
The days when a merged company could proactively migrate to a single transmission platform are long gone. Both subscriber comunities are way too large to make migration economically feasible. The most that would happen is that they would de-emphasize one service or the other and simply stop manufacturing that type of receiver.
The benefit to the companies from a merger would be economies of scale in accounting, legal, customer support and, most importantly, content negotiations. A DirecTV/Dish merged entity would be the largest multi-channel operator in the country and would, therefore, have more leverage with the networks.
I have to disagree with most of what you write here. When D* bought out Primestar in the '90s with the sole purpose of shutting it down, Primestar was gone within 6 months to a year. I know the communities are a lot larger now, but I would think the new D*/Dish companies would want to rent their excess satellite space out ASAP. I agree with your last paragraph, it would be great for the companies involved but terrible for the consumer. Customers have no reason to think that the new company would pass the savings of the economies of scale on to them, if anything less competition will result in higher rates.
If there were ever a merger (and I don't think it would pass muster with the FCC and other agencies) there would be no merging of the services...DirecTV and Dish subscribers would continue to use seperate receivers and different dishes pointed at different satellites, for at least a decade, probably longer.
I doubt that, simply because it is unlikely that the all current Dish satellites have a useful life of a whole decade. There's no way they'd want to launch any new satellites for Dish services after they bought them. I would assume if they merged that soon all new installs would be Directv installs, and any changes that a Dish customer wanted to make that would require a new dish (HD upgrade) or adding receivers above a certain threshold would switch them to Directv. They would offer Dish subscribers the same type of Genie upgrade, free Sunday Ticket (or free movie channels for those not interested in sports) to get them to upgrade that they do with Directv customers, part of the deal would be that they had to switch to Directv receivers and packages. They'd have all the former Dish contractors to help with this process, and could step up production of HR44, C41 and SL3S dishes.
Directv could sort of slowly push the Dish upgrades in various other ways as well, by limiting access to new channels and technologies like 4K to the Directv side, and via price changes on the packages for customers they want to migrate. i.e., include something with the bill saying "in 3 months the price for your service increases by this much, if you switch to Directv dish/receivers the equivalent package is x and if you commit for 24 months we'll lock that price in for the entire time" They could encourage migration by whatever segment of customers they want by doing price increases differently for the different packages and equipment. One year maybe they target people with high end packages but using SD only, the next they target HD customers who have no DVRs, and so on. They would probably reserve the very best offers for long time Dish only subscribers because they are likely to be the most resistant to switching to Directv.
I have to disagree with most of what you write here. When D* bought out Primestar in the '90s with the sole purpose of shutting it down, Primestar was gone within 6 months to a year. I know the communities are a lot larger now, but I would think the new D*/Dish companies would want to rent their excess satellite space out ASAP. I agree with your last paragraph, it would be great for the companies involved but terrible for the consumer. Customers have no reason to think that the new company would pass the savings of the economies of scale on to them, if anything less competition will result in higher rates.
I've lost track how many subs Dish has now, but lets just say 14M. If you say $800/sub to convert them between hardware and truck rolls that's $11,200,000,000, they'd have to make a ton of money renting out transponder space and they wouldn't be able to do that until all the subs on at least one of the arc's had been converted. Yes I could see new subs being forced on one or the other system but not a wholesale conversion ASAP.
Sharing IP would be nice. Getting the Dish engineers to make DirecTV receivers fast, and getting the DirecTV graphic designers to make Dish receivers look aesthetically pleasing.
But I don't think its a good idea. That would become a monopoly in some area's where dbs is your only choice. Or what if you can only get DirecTV obstructions to Dish Eastern Arc.. or vice versa (only can get Dish because obstructions in DirecTV's skyline).
IPTV providers via BYOA won't work great either. Not with all the excessive caps ISP's are using. Especially those in the sticks stuck with 4G LTE... or even if they have capless DSL, its DSL... what's that in the sticks... 3 mbps? Not enough for HD video on multiple TV's.
I doubt that, simply because it is unlikely that the all current Dish satellites have a useful life of a whole decade. There's no way they'd want to launch any new satellites for Dish services after they bought them...
The age of the satellites is irrelevant - the merged company would never surrender licenses that can serve the Western Hemisphere. While, in the extreme long run, Dish's eastern arc slots might be reallocated to latin America, they will still need functioning satellites there. Therefore, old satellites WILL be replaced, merger or no.
As I said, they would probably deprecate one receiver architecture or the other, but it would take a VERY long time before the number of "legacy" customers reached a number small enough to make the wholesale conversion feasible. When aquired Primestar had only about 2 million subscribers. Dish has 14 million, and the cost of current hardware and labor is much higher than when those 2 million Primestar subscribers were migrated (there were no DVRs back then, for example).
Another factor is that if they were going to do such a migration, it would probably involve, at a minimum, an LNB like the Slimline 5 (supporting Ku at 101/110/119 and Ka at 99/103) which has not even been the DirecTV standard for a couple of years. It would make sense to also include the Dish Ku and Ka capacity at 121 in a new ODU. Dish leases the capacity on Ciel-2 at 129, so that is a non-issue. In the end, this means an ODU capable of receiving Ka from 99/103/121, RDBS from 99/103/121 and Ku from 101/110/119/121. This would require a new switching architecture as well, supporting at least 9 or 10 bands (depending on whether RDBS is available at 121) and maybe triple stacked from dish to switch across 3 or 4 cables. This would not be not cheap to design and build.
Someday they would have a single platform, just like someday XM and Sirius will be a merged service, but it would take a very long time.
I doubt that, simply because it is unlikely that the all current Dish satellites have a useful life of a whole decade. There's no way they'd want to launch any new satellites for Dish services after they bought them. I would assume if they merged that soon all new installs would be Directv installs, and any changes that a Dish customer wanted to make that would require a new dish (HD upgrade) or adding receivers above a certain threshold would switch them to Directv. They would offer Dish subscribers the same type of Genie upgrade, free Sunday Ticket (or free movie channels for those not interested in sports) to get them to upgrade that they do with Directv customers, part of the deal would be that they had to switch to Directv receivers and packages. They'd have all the former Dish contractors to help with this process, and could step up production of HR44, C41 and SL3S dishes.
Directv could sort of slowly push the Dish upgrades in various other ways as well, by limiting access to new channels and technologies like 4K to the Directv side, and via price changes on the packages for customers they want to migrate. i.e., include something with the bill saying "in 3 months the price for your service increases by this much, if you switch to Directv dish/receivers the equivalent package is x and if you commit for 24 months we'll lock that price in for the entire time" They could encourage migration by whatever segment of customers they want by doing price increases differently for the different packages and equipment. One year maybe they target people with high end packages but using SD only, the next they target HD customers who have no DVRs, and so on. They would probably reserve the very best offers for long time Dish only subscribers because they are likely to be the most resistant to switching to Directv.
A merger would be about everything that happens before the signal gets to the satelites. It would have little to do with what happens with the satelites and in customers homes for a very very long time.
I can see them saying all new customers will get one platform and not a choice of both, after many years and getting both companies to have the exact same costs of and packages for programming. That would take many many years by itself. Probably close to seven years I'm guessing if that fast. One must take in to consideration current contracts lifespans.
I still say a merger with Netflix and or sprint or other similar companies if a horizontal nature makes far More sense than with dish for directv or dish. Vertical integration for then would not offer as many benefits as horizontal expansion.
Another factor is that if they were going to do such a migration, it would probably involve, at a minimum, an LNB like the Slimline 5 (supporting Ku at 101/110/119 and Ka at 99/103) which has not even been the DirecTV standard for a couple of years. It would make sense to also include the Dish Ku and Ka capacity at 121 in a new ODU. Dish leases the capacity on Ciel-2 at 129, so that is a non-issue. In the end, this means an ODU capable of receiving Ka from 99/103/121, RDBS from 99/103/121 and Ku from 101/110/119/121. This would require a new switching architecture as well, supporting at least 9 or 10 bands (depending on whether RDBS is available at 121) and maybe triple stacked from dish to switch across 3 or 4 cables. This would not be not cheap to design and build.
Why would they try to combine the two? With two new satellites going up already, what could Directv possibly use all the combined capacity for? I'd think they'd keep the two systems separate, and try to eventually retire one. Even if that takes a decade it still results in some significant long term savings. If they design a new ODU that uses both then they see no future savings in satellite build/launch costs, and have more bandwidth than they could ever use except in the unlikely event that 4K upgrades are as popular as HD upgrades (I think its popularity will be much closer to 3D, because the visible improvement between HD and 4K is very difficult to see, whereas it was massive going from SD to HD)
I have to disagree with most of what you write here. When D* bought out Primestar in the '90s with the sole purpose of shutting it down, Primestar was gone within 6 months to a year.
Primestar was 2.3 million customers (April 1999). DirecTV managed to get 600k to convert by the end of the year and operated the Primestar network well in to 2000 (completing the conversion in the third quarter). It was a very expensive conversion.
DISH lost $690 million in 2002 in merger termination costs. It seems that it is also expensive to try a merger - even if it does not complete.
Why would they try to combine the two? With two new satellites going up already, what could Directv possibly use all the combined capacity for? I'd think they'd keep the two systems separate, and try to eventually retire one. Even if that takes a decade it still results in some significant long term savings. If they design a new ODU that uses both then they see no future savings in satellite build/launch costs, and have more bandwidth than they could ever use except in the unlikely event that 4K upgrades are as popular as HD upgrades (I think its popularity will be much closer to 3D, because the visible improvement between HD and 4K is very difficult to see, whereas it was massive going from SD to HD)
I think that in the coming decade (which is how long a hypothetical phase out of one platform would take) you'll see not only 4K, but 8K video take hold. Not to mention "glasses-less" 3D. Many people questioned the adoption of HD with the same "it is not THAT much better" argument because they were thinking in terms of the 36" CRT TVs of the period. While I can't imagine devoting a 10 foot wall to just a TV, I suspect that once the prices get into 4 significant digits you'll see lots of 10, 12 and even 14 foot screens getting installed. Technologies like OLED will even make such large screens easy to install.
For these and many other reasons I can't imagine a hypothetical merged company giving up ANY satellite capacity. If they don't need it, they can always lease it out. But they WILL replace the current satellites, no matter what else happens.
Primestar was 2.3 million customers (April 1999). DirecTV managed to get 600k to convert by the end of the year and operated the Primestar network well in to 2000 (completing the conversion in the third quarter). It was a very expensive conversion.
DISH lost $690 million in 2002 in merger termination costs. It seems that it is also expensive to try a merger - even if it does not complete.
For these and many other reasons I can't imagine a hypothetical merged company giving up ANY satellite capacity. If they don't need it, they can always lease it out. But they WILL replace the current satellites, no matter what else happens.
True, but there would be little in the way of benefit to the public interest in doing so. A new DBS operator appearing is unlikely. In all probability I think the FCC would take the position that since the merged entity would already have all the infrastructure in place to use these assets, it would be in the public interest to allow them to keep them, and find new applications for the capacity. At a minimum, an argument could be made that the extreme eastern and western assets could be used to enhance service to US territories in the Pacific and Caribbean, as well as Alaska and Hawaii (although the eastern assets would make more sense to be used for Latin American service). IMHO it is more likely that these sorts of service enhancements would be made a condition of the merger, rather than a divestiture.
I just did a quick google (using Google) on Chinese TV, and see Dish prominently mentioned. Do their feeds into China come from their sat. or is it linked by other means. And if by sat, is it "direct" (no pun intended) or bounced to another sat.?
I just did a quick google (using Google) on Chinese TV, and see Dish prominently mentioned. Do their feeds into China come from their sat. or is it linked by other means. And if by sat, is it "direct" (no pun intended) or bounced to another sat.?
Are you sure that was delivery of programming INTO China? Dish distributes lots of Chinese channels here in the US - both by satellite and via IPTV (DishWorld).
No, not sure, but I asked to see what sat. services there were in China, and the Dish logo showed up.
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Related Threads
?
?
?
?
?
DBSTalk Forum
3.6M posts
111.9K members
Since 2001
A forum community dedicated to digital bit streaming enthusiasts. Come join the discussion about programming, content, and reception, home theaters, displays, models, styles, satellites, reviews, accessories, classifieds, and more!