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DirecTV CEO: “Never Say Never” To A Merger Deal With Dish Network

Discussion in 'DIRECTV General Discussion' started by Athlon646464, Aug 3, 2013.

  1. Aug 7, 2013 #81 of 217
    wilbur_the_goose

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    Sirius killed XM, even though XM was by far larger when they merged. Most XM employees (and all related to the programming) were fired, and we're left with Sirius.

    Knowing Charlie, he'd kill D* in a merger. Both services would offer 99% of the same programming, I fear.
     
  2. Aug 7, 2013 #82 of 217
    inkahauts

    inkahauts Well-Known Member

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    You know how much space Directv uses to push movies right now? They could at the bare minimum use them to push all their on demand content to give people full access to all on demand content without needing internet connections. They could also carry every local and sub channel. And they'd have plenty of room for ultrhd channels. Theres lots of ways to use it.
     
  3. Aug 8, 2013 #83 of 217
    Athlon646464

    Athlon646464 Gold Members DBSTalk Gold Club

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    Will Dish Network And DirecTV Resist Wall Street’s Pressure On Them To Merge?

    Investors are becoming so obsessed with the idea of a DirecTV-Dish Network merger that it seems to be just a matter of time before the companies succumb. Questions about the possibility kept popping up in Dish Network’s quarterly earnings call yesterday. Company watchers “seem to be fixated” on the subject, Brean Capital’s Todd Mitchell says.

    And execs don’t seem to mind. Last week DirecTV CEO Michael White said he’d “never say never.” And Evercore Partners’ Bryan Kraft says he has “never heard [Dish Network Chairman Charlie Ergen] speak as openly and positively regarding the possibility of a combination with DirecTV” as he did yesterday. The FCC blocked a satellite TV merger in 2002 on the grounds that it would leave many rural subscribers, who don’t have cable, with just one pay TV provider.

    But Ergen says that the business is “materially different” than it was then. Verizon FiOS and AT&T U-verse serve many markets. “And then of course, you have almost an unlimited number of people now on digital Internet getting into the business, whether it be from Netflix to Hulu to Amazon to everything else that you can do on the Internet,” Ergen says. “And that’s only going to grow.” Later he added that “there’s not any question that putting Dish and DirecTV together makes a lot of sense…. If you just wanted to create short-term value, that would be probably your No. 1 option.”

    Full Story Here

    [​IMG]
    DeadLine.com
     
  4. Aug 8, 2013 #84 of 217
    Stuart Sweet

    Stuart Sweet The Shadow Knows!

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    Wall Street knows nothing about the technologies involved. Mr. White and Mr. Ergen are free to pose "what-if" scenarios but the delivery systems are so different (about as different as two DSS systems can be) and so are the corporate philosophies. I just don't see it.
     
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  5. Aug 8, 2013 #85 of 217
    PCampbell

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    Well put. It would be a bad deal for us at our place up north, Dish is the only option to Directv.
     
  6. Aug 8, 2013 #86 of 217
    Athlon646464

    Athlon646464 Gold Members DBSTalk Gold Club

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    I agree, Stu.

    Sometimes, however, the dollar seems to trump all and things just seem to happen as a result. Sirius/XM for example.
     
  7. Aug 8, 2013 #87 of 217
    Laxguy

    Laxguy Honi Soit Qui Mal Y Pense.

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    Winters,...
    But the Sirius-XM situation was different in many respects. For one, there were financial imperatives there, where there are not with DIRECTV® and Dish. The technologies at least seemed easier to merge, though that may never happen it seems.
     
  8. Aug 8, 2013 #88 of 217
    lparsons21

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    I don't think the financial imperatives are there now, but at some point that could very well change as the younger viewers move away from sat/cable.
     
  9. Aug 8, 2013 #89 of 217
    Athlon646464

    Athlon646464 Gold Members DBSTalk Gold Club

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    ^^^

    Exactly - there is a sea change afoot. I'm guessing cord cutting will accelerate over the next 12 to 36 months, an eternity with technology.
    It will be interesting to watch how it all shakes out. There is a battle already going on between content providers and content deliverers. It seems most deliverers are looking to satisfy their customer's demands with new tech while the old guard at the providers like the status quo.

    I'm thinking the latter is not as into technology as they should be, nor do they understand it. They see it as a threat rather than an opportunity. :bang

    Again - it is fun to watch......... :eek2:
     
  10. Aug 8, 2013 #90 of 217
    nmetro

    nmetro Godfather

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    Even if both companies used the same technologies, had the same offerings, etc.; the government will not let a merger happen. First, because it will create a satellite provider monopoly Second, satellite is the only option in most rural areas, as they may be too distant from over the air or geography limits over the air as an option. Third, rural areas have limited options in regards to network connectivity. Fourth, cable may be available, but it is very expensive for rural homeowners to run the cable from the street to their homes.

    Then there is politics. As we have seen by our dysfunctional Congress, Congressmen, and Senators, from rural states will block this; even if a merger gets government approval. Even though things have changed since the last time a merger came up; not much has changed in many rural areas. So, the investors can talk all they want; but they will be fighting an uphill battle.
     
  11. Aug 8, 2013 #91 of 217
    Laxguy

    Laxguy Honi Soit Qui Mal Y Pense.

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    Winters,...
    Especially if they used the same tech!

    And the points you raise are good ones, but competition in urban and suburban areas will keep prices in check, and the Mega-Sat company will not be allowed to gouge those who have no choice but sat. In that I am confident.

    That said, I don't want a merger.
     
  12. Aug 8, 2013 #92 of 217
    meldar_b

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    I sure hope then do not merge! we need competition to keep prices down. prices shot up right after the take over. also look what happened to XM after the merger they killed the best part of satellite radio commercial free. Siriusxm is not by any means commercial free with all the dj chater and channel cross promotions I'm better off listening to local radio now.
     
  13. Aug 8, 2013 #93 of 217
    Mike Greer

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    Yep - a merger would be a bad thing for consumers and a good thing for stock holders. Worst part is rather than getting the best of both companies we would get the worst of both companies because that will make the stock holders the most money.

    If the government was crazy enough to allow such a thing I suspect that would speed up the cord-cutting....
     
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  14. Aug 8, 2013 #94 of 217
    wilbur_the_goose

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    Wall Street analysts are a very odd lot. They're like "TMZ" for the stock market. No wonder they're fixated.
     
  15. Aug 9, 2013 #95 of 217
    Diana C

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    I seriously doubt that were we to have only one satellite option (and in most places subscribers have, at most, only one cable option) we would not see Hoppers or Genies, wireless set top boxes, or even the amount of HD we have now.

    Ergen is right though...the market is "materially different" than it was 2002. In 2002 neither company was making a profit. In 2002 both companies were struggling with capacity limits. But these are factors that go against a merger, not in favor of one.

    The reason investors like the idea is that it would instantly create the largest linear TV distributor in the country. The combined company would leapfrog in front of Comcast (and between the Dish/DirecTV combo and Comcast, they would serve about half the nation's households). A merger at that scale would generate vast money making opportunities for investors and bankers. It would, however, not be such a boon to these companies' customers.

    Hopefully, the regulators would continue to see that a Dish/DirecTV merger is not in the public interest.
     
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  16. Aug 9, 2013 #96 of 217
    PCampbell

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  17. Aug 9, 2013 #97 of 217
    Mike Greer

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    Well said.
     
  18. Aug 9, 2013 #98 of 217
    Stuart Sweet

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    Sirius/XM was mentioned, and just looking at how those technologies have never merged, and how satellite radio has become marginalized in favor of internet radio... that should tell you right there why the two companies won't merge.

    Technologically, Sirius/XM had two much more similar technologies, and the ability to merge the channel structure was there in a much more similar way, and yet it's still an issue. The companies only merged, only were allowed to merge, because they convinced regulators that neither would exist unless they did.

    Mr. Ergen could theoretically tout his losses and declining customer base (although I doubt he would) but DIRECTV's numbers are far too good to claim that they would fail without DISH.

    We're also talking about changes in everything here. Both companies would have to revamp literally evey bit of their operations. In the meantime, the competition wouldn't be resting, they would be innovating. That's what allowed Spotify to overtake Sirius/XM.

    Say for example it worked this way: A combined company decides to use DIRECTV's satellites purely for downstream signal, in other words signals to the home. This gives them twice the capacity to the home. They use DISH's fleet for backhaul, in other words signals between content providers and the broadcast centers. Now, let's put aside that it's possible the satellites couldn't even be configured for those roles.

    At that point you're talking about a program to refit 14 million subscriber homes with DIRECTV equipment. At an average $500 cost to do that (remember equipment costs, labor, parts, promotional programming writeoffs, etc.) that's $7 billion out of pocket. $7 billion that doesn't get passed along to the customer, since the costs are already near the top of what people will take. So it comes out of program acquisition, research and development, etc. End of story, DIRECTV loses.

    On the other hand, if you continue to operate the systems in parallel for several years, where's the cost savings? Where's the synergy? That doesn't make sense either.

    Underying this whole argument is the fact that residential pay-TV is a zero-sum business at this point. Any growth by one company means a loss by other companies. If you factor in cord-cutting and streaming, it's possible that pay-TV isn't even that. It doesn't make sense for DIRECTV and DISH to combine for a temporary bump in market share just so they can dominate a market where no further growth is possible.

    Long-term, it would be better for both companies to work on delivery systems for the US market that address the growing market desire for a la carte and on-demand. DISH has been doing this so far by borrowing a lot of money and trying to buy wireless companies. DIRECTV has been doing this so far by building out emerging markets which leaves them both profitable and low on debt.
     
  19. Aug 9, 2013 #99 of 217
    James Long

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    The last year DISH posted an annual loss was 2002 when they had $690 million in merger termination costs. DirecTV has been profitable every year since at least 2002 (I don't have annual figures for 2000 and 2001 for DirecTV).

    It seems that things got better when they stopped worrying about merging and got on with running their own companies. :)
     
  20. Aug 9, 2013 #100 of 217
    James Long

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    FYI: DISH uses a fiberoptic network to connect all markets in the US to their uplink centers. That network is available to broadcasters who wish to tie in and share programming. The economy of using that network to feed both DISH and DirecTV uplink centers instead of each running their own points of presence would be helpful.

    Anything in MPEG4 should be able to be shared ... although dish upgrades would be needed to receive the other feeds. It would be trivial on the DISH side to allow tuning of the rest of 110 and 119 (going from 82 to 96 transponders on western arc). I do not know how easy it would be to open up DirecTV receivers to receiving the rest of 110 and 119 along with 101.

    Of course it would never happen ... but the techie in me wants to see how well the two systems could share feeds despite remaining separate. SiriusXM is finally doing that on their newest radios.
     

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