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Directv CEO Says Possible Merger with Dish "Could Be Pro-Consumer"


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225 replies to this topic

#101 OFFLINE   twiseguy

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Posted 24 September 2012 - 10:04 AM

http://profootballta...ions-hail-mary/

Here's another example.

But in all seriousness, a merger would do what? A combined entity with say 35M customers would be the biggest provider of in home TV services It would have incredible leverage with content providers. No doubt a combined entity would reduce fees to content providers.

But as consumers is it even reasonable to expect that we get this "savings" in our bills? Fat chance. It will all go to the new combined entity.

This is NOT about consumers.


You`re right. A combined company would have 35M people by the shorthairs when it comes to raising rates. If you live out in the sticks, what would be your options?

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#102 OFFLINE   john262

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Posted 24 September 2012 - 12:02 PM

Directv's profit margin is not that large, very much in line with other companies and industries. 9.84% the last quarter and has been between 7.5% and 10.3% the last three years.

In fact, Directv's profit margin is in the 68th percentile and ranked 1391 out of 4,420 companies. In the CATV systems sector, ranked 11th out of 20.

Apple, is at 25.1%. THOSE GREEDY BASTARDS!! ;)

Yahoo at 18.61%
Google at 22.8%
Oracle 24.86%
AT&T 12.36%
Exxon 12.49%
Disney 16.51%

ETc, etc


DIRECTV DTV +0.40% today reported an increase in second quarter 2012 revenues of 9% to $7.22 billion, operating profit before depreciation and amortization(1) (OPBDA) of 9% to $2.01 billion and operating profit of 15% to $1.41 billion compared to last year's second quarter. DIRECTV reported that second quarter net income increased 1% to $711 million and diluted earnings per share grew 20% to $1.09 compared with the same period last year.


Is anyone going to tell me that that's not enough profit already? Of course some of the Directv sycophants in this forum will defend them no matter what they do, but how can anyone reasonably argue that they are not making enough money already? No to any mergers.

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#103 OFFLINE   hdtvfan0001

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Posted 24 September 2012 - 12:04 PM

You`re right. A combined company would have 35M people by the shorthairs when it comes to raising rates. If you live out in the sticks, what would be your options?

That appears to be a pessimistic and unfounded perspective.

A wide revenue stream and lowered operating costs (combined support and technologies just to name 2 elements) through merged operations actually would probably reduce the probability of raised rates, or at minimum stabilize them.

In addition, the potential 35 million subscriber total pales in comparison to the cable subscriber total numbers - so plenty of competition would keep an incentive to be competitive.
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#104 OFFLINE   Hoosier205

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Posted 24 September 2012 - 12:09 PM

Is anyone going to tell me that that's not enough profit already? Of course some of the Directv sycophants in this forum will defend them no matter what they do, but how can anyone reasonably argue that they are not making enough money already? No to any mergers.

http://www.marketwat...ults-2012-08-02


No, I'd never tell any company they are making enough money. I'd encourage them to be as successful as possible.
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#105 OFFLINE   Carl Spock

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Posted 24 September 2012 - 12:20 PM

That appears to be a pessimistic and unfounded perspective.

A wide revenue stream and lowered operating costs (combined support and technologies just to name 2 elements) through merged operations actually would probably reduce the probability of raised rates, or at minimum stabilize them.

In addition, the potential 35 million subscriber total pales in comparison to the cable subscriber total numbers - so plenty of competition would keep an incentive to be competitive.

I don't think you can say that so categorically. Whether the merged companies would be a monopoly and capable of monopolistic pricing is certainly open to a lot of discussion. I don't think there is much question the combined company would be a monopoly in rural areas. How much of a problem that would be is the only question, at least regarding areas not serviced by cable. Whether competition in primary and secondary markets would be enough to keep a single satellite provider from being a monopoly is a very questionable issue. It was determined it would be a monopoly just 10 years ago.

Nobody responded to my analysis of exactly this issue upthread here.

And john262, who made you the profit police? Laws against making too much profit are few. There are usury laws against charging too much interest but most of those unfortunately have gone away. Usury was a sin a century ago. Now it's considered a pawn store reality TV show. There are also laws against monopolies for exactly this issue. But otherwise, if you can make something for a 10¢ and sell it for $10, more power to you.

Edited by Carl Spock, 24 September 2012 - 12:25 PM.

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#106 OFFLINE   hdtvfan0001

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Posted 24 September 2012 - 12:24 PM

Whether the merged companies would be a monopoly and capable of monopolistic pricing is certainly open to a lot of discussion.

That statement is certainly true.

My point is that a merged DirecTV/Dish entity would hardly be a monopoly in terms of the overall content-delivery business itself. It would for sat alone obviously, but that's only once slice of the pie. That fact alone would deem that competitive forces still very much come into play when it comes to pricing models.
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#107 OFFLINE   harsh

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Posted 24 September 2012 - 12:57 PM

That appears to be a pessimistic and unfounded perspective.

Given the similar Sirius/XM merger and the NBC/Comcast merger as examples , I see little reason not to be pessimistic about the outcome from the perspective of a viewer.

Regrettably (or happily if that's the way you look at it), each company seems to be edging towards the other.

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#108 OFFLINE   raott

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Posted 24 September 2012 - 12:57 PM

That statement is certainly true.

My point is that a merged DirecTV/Dish entity would hardly be a monopoly in terms of the overall content-delivery business itself. It would for sat alone obviously, but that's only once slice of the pie. That fact alone would deem that competitive forces still very much come into play when it comes to pricing models.


Agreed, although they would or could be a monopoly in a specific rural area, the pricing is national pricing rather than area specific. The need to compete with cable companies in non-rural areas would negate concerns about a rural monopoly, IMO.
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#109 OFFLINE   hdtvfan0001

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Posted 24 September 2012 - 01:09 PM

Given the similar Sirius/XM merger and the NBC/Comcast merger as examples , I see little reason not to be pessimistic about the outcome from the perspective of a viewer.

Regrettably (or happily if that's the way you look at it), each company seems to be edging toward the other.

That, of course, assumes all mergers operate that way, which is not the case. I also disagree that the Sirius/XM scenario is nearly the same set of circumstance in terms of scope, scale, maturity of companies and technologies, or industry impact. Each merger has it's own dynamics.

Since this theoretical merger was evaluated more than once before, and only agency approval was seen as a potential obstacle, I suspect that both parties already have some form of a "what if" strategy.
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#110 OFFLINE   tonyd79

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Posted 24 September 2012 - 05:42 PM

I'll add this. Directv and Dish have advanced because of competition between them. Watch the features. The channels. Most of their ads. Directv versus Dish.

A combined system would not see cable as their true competition and would dwarf the largest cable company by at least 50%. Not competition.

Satellite is not the same market as cable. The dynamics are different. For example, no one can handle Sunday Ticket like directv. No one would have as much out of town sports as satellite (as it is up there anyway and making it available is a software task). Different critters. As the PAC 12 knows.
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#111 OFFLINE   Carl Spock

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Posted 24 September 2012 - 06:03 PM

Great point, tonyd79. I'd never thought of that.

The competition aspect is a good one but the national coverage point hit me more.

None of the cable companies are truly national providers. All have great swatches of the country they don't reach. Many are basically regional providers. Only DirecTV and Dish are nation-wide television service providers. That gives them a unique reach for news, religious, public service, shopping and infomercial channels.

Dish and DirecTV also allow an advertiser to make a buy that will cover the entire country, getting both reach and diversity. If an advertiser like McDonalds wants to hit a lot of people in different age and demographic groups, they would either have to buy the networks or place ads with many different content providers. Instead, now they can buy DirecTV or Dish and find their ad in many places across the platform.
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#112 OFFLINE   WebTraveler

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Posted 24 September 2012 - 06:17 PM

Agreed, although they would or could be a monopoly in a specific rural area, the pricing is national pricing rather than area specific. The need to compete with cable companies in non-rural areas would negate concerns about a rural monopoly, IMO.


Who says they cannot price per market?

They never have, but that does not necessarily mean they cannot.

Comcast has outlets all over the nation, and for whatever reason, they are not all priced the same. I don't see any reason why Directv cannot charge one rate in one locality and another rate in another.

Is there a reason?

#113 OFFLINE   WebTraveler

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Posted 24 September 2012 - 06:19 PM

and competition brings out the best, so if the companies were combined what incentive would there be to continue innovative new features?

From a programmer perspective I like the idea. These guys are raising rates like crazy.

From a customer perspective I am very suspect.


I'll add this. Directv and Dish have advanced because of competition between them. Watch the features. The channels. Most of their ads. Directv versus Dish.

A combined system would not see cable as their true competition and would dwarf the largest cable company by at least 50%. Not competition.

Satellite is not the same market as cable. The dynamics are different. For example, no one can handle Sunday Ticket like directv. No one would have as much out of town sports as satellite (as it is up there anyway and making it available is a software task). Different critters. As the PAC 12 knows.



#114 OFFLINE   Carl Spock

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Posted 24 September 2012 - 06:29 PM

Who says they cannot price per market?

They never have, but that does not necessarily mean they cannot.

Comcast has outlets all over the nation, and for whatever reason, they are not all priced the same. I don't see any reason why Directv cannot charge one rate in one locality and another rate in another.

Is there a reason?

If I had a monopoly, I would charge different prices per market.

That's the essence of a monopoly. You can set the price people have to pay. If you don't do that, you aren't being a good monopoly.

It would be no great sweat to come up with a nationwide map of the competitive prices for each market. When someone became a new subscriber, the CSR would plug in their zip code and get a price sheet for all the various packages and services on the screen for their location. Live in Detroit and have cheap cable choices? You'd get a better deal than the guy who lives in New York City. The person with a cabin in the Rockies would pay the most. Maybe only the introductory package would be the same price nationwide so the merged company could advertise, "Get USA and Nickelodeon starting at only $19.95 a month."

This may seem cruel to some but it's the way capitalism and monopolies work. You squeeze the customer when you don't have competition.
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#115 OFFLINE   tonyd79

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Posted 24 September 2012 - 07:24 PM

Who says they cannot price per market?

They never have, but that does not necessarily mean they cannot.

Comcast has outlets all over the nation, and for whatever reason, they are not all priced the same. I don't see any reason why Directv cannot charge one rate in one locality and another rate in another.

Is there a reason?


Probably just too complicated. And they have single ad campaigns.

Comcast is not really one company but a coalition of smaller systems. The local systems have a lot of autonomy in pricing, channel selection. Heck, my nephew who works for them says that a lot of the local systems are resisting the Comcast HD lineup plan (all in 800s and up, reorganized).
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#116 OFFLINE   tonyd79

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Posted 24 September 2012 - 07:25 PM

and competition brings out the best, so if the companies were combined what incentive would there be to continue innovative new features?

From a programmer perspective I like the idea. These guys are raising rates like crazy.

From a customer perspective I am very suspect.


Total agreement.
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#117 OFFLINE   zimm7778

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Posted 24 September 2012 - 07:28 PM

No, I'd never tell any company they are making enough money. I'd encourage them to be as successful as possible.


+1

#118 OFFLINE   Satelliteracer

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Posted 24 September 2012 - 11:06 PM

Is anyone going to tell me that that's not enough profit already? Of course some of the Directv sycophants in this forum will defend them no matter what they do, but how can anyone reasonably argue that they are not making enough money already? No to any mergers.

http://www.marketwat...ults-2012-08-02


I grew up in a time where it was good to have American companies doing well and being profitable. Somewhere along the line that has changed. To each, their own, but I don't think making 10% profit margin is greedy. All it takes is a few bad quarters where you are underwater and things can get south in a hurry. I want companies to be able to make profits, reinvest in their companies, innovate, etc, and be prepared for those sour times as well because bailouts typically aren't the norm.

Again, each to their own but 10% isn't greedy in my book, not even close, not with the world in which we live in.
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#119 OFFLINE   James Long

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Posted 25 September 2012 - 12:02 AM

The trouble is that these multi-billion dollar profitable companies play the "buddy" card. Every time they put out a press release that says a decision was made "to save their customers money" they are trying to make us feel like they really care about our money.

Have you ever seen the press release that said "we are dropping this channel or not adding this other channel in order to raise our profits and make more money"? Have you seen a press release that said "we need our annual rate increase will allow us to maintain our 10% profit margin ... or increase our profits beyond 10%"? No ... the "bad news" for consumers is always wrapped in excuses ("just passing on the rate increases we are seeing" or "just keeping your rates down") or "PR" (also spelt BS) that is intended to give their customers a warm fuzzy feeling about the bad news.

And the PR works. There are people who will defend to the death a company that they do not work for and hold no stock in. A company who will gladly continue to raise rates to keep their profits up. A company who will raise rates on retirees on a fixed income and when they can't pay they will let them go and find younger, more affluent customers. Congrats to the PR team for making customers happy about it.

Seeing a company remain reasonably profitable is good for all the reasons mentioned. But I don't mind that people disagree on what level is "reasonable". If a merger such as DirecTV and DISH would bring down costs for the consumer it might be a good thing. But somehow the expectation that consumer prices will continue to rise while costs are reduced for the new company seems to be more likely. Higher prices, more profit. :(


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#120 OFFLINE   WebTraveler

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Posted 25 September 2012 - 06:35 AM

Probably just too complicated. And they have single ad campaigns.


Maybe, but in time they will figure it out. If there is no national competitor (i.e. only one satellite company) then it's a matter of time before they figure it out. So long as someone else is lurking with a national rate no one can make a move.

Comcast is not really one company but a coalition of smaller systems. The local systems have a lot of autonomy in pricing, channel selection. Heck, my nephew who works for them says that a lot of the local systems are resisting the Comcast HD lineup plan (all in 800s and up, reorganized).


Yes this is true - as Comcast has acquired existing systems it really has not done a wholesale consolidation.....but in time you will see it get tighter as they continue to look for efficiencies in their operation.




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