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


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#26 OFFLINE   sunfire9us

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Posted 03 August 2013 - 11:26 PM

If DTV and Dish were to merge together, the new company would have more leverage when it comes to carriage deals. It's all about numbers. I think this could cause the content providers to quit being so greedy everytime.



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#27 OFFLINE   phrelin

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Posted 04 August 2013 - 12:05 AM

IMHO a merger would be fought tooth-and-nail at the FCC and in Congress by the content providers and the cable companies. The combined customer base would represent a too powerful force in negotiations.

 

That's what I would have said only a few years ago before Comcast took over NBCU. Now, who knows? Congress members aren't cheap, but that's a lot of money the two companies can leverage.


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#28 OFFLINE   Drucifer

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Posted 04 August 2013 - 12:57 AM

Just how dd the XM Sirus merger work out for the consumer?


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#29 OFFLINE   inkahauts

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Posted 04 August 2013 - 02:51 AM

I'd rather see DIRECTV buy Netflix and sprint. That would be good strategic moves long term.

#30 OFFLINE   Mike Bertelson

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Posted 04 August 2013 - 06:13 AM

Just how dd the XM Sirus merger work out for the consumer?

They didn't raise their prices for three years, a promise they made when the merger was proposed. Since the 2008 merger they have raised the base price from $12.95 to $14.49 a month. A $1.45/mo increase in five years. Not bad.

Although, I'm not sure it's a fair comparison with DIRECTV and Dish. SiriusXM has much more competition...most of which it free.

Mike


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#31 OFFLINE   bobvick1983

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Posted 04 August 2013 - 06:18 AM

As I've said, I don't think it'll happen but there is still plenty of competition.  The top ten we could name off the top of our heads and a couple of dozen more.  Competition won't be a problem.

 

Mike

Unless you live in a rural location. DirecTV or Dish is the only option where I live. No cable TV, much less cable broadband. We do have DSL from CenturyLink, when it works. So if you are in rural America, there is virtually no competition. 


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#32 OFFLINE   James Long

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Posted 04 August 2013 - 07:36 AM

Although, I'm not sure it's a fair comparison with DIRECTV and Dish. SiriusXM has much more competition...most of which it free.


SiriusXM took two companies that managed to convince the government that neither would survive without a merger and let them work together as one. At this point neither DirecTV nor DISH are approaching the point of not surviving ... it is an issue where both could make more money by combining operations and reducing competition - not one of survival.

The FCC is still holding out for a new entrant in the satellite TV marketplace (something that could not have happened with Sirius and XM with the way the spectrum was assigned). A merger would probably be good for DirecTV and DISH - but it wouldn't be good for most of their subscribers.
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#33 OFFLINE   Laxguy

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Posted 04 August 2013 - 08:09 AM

The FCC is still holding out for a new entrant in the satellite TV marketplace (something that could not have happened with Sirius and XM with the way the spectrum was assigned). 

Not doubting you, but how do you know this? 


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#34 OFFLINE   James Long

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Posted 04 August 2013 - 08:39 AM

The FCC still has not permanently assigned DISH the final two transponder slots on 61.5. DISH can use them only under special temporary authority. The FCC's stated reason for not making a permanent assignment was to allow for a new entrant.

What a new entrant will do with only two transponders at 61.5 is a mystery. SkyAngel operated their service off of two transponders (loaning the other six to DISH in exchange for use of the satellite). With MPEG4 someone could put up a small satellite service but with the cost of a satellite they would probably end up leasing transponders from DISH (unless they buy a used satellite).

SkyAngel moved to IPTV (trading LOS issues for lack of broadband service issues) in order to survive. GloryStar remains in business as a FTA option for people wanting that niche of programming. The last small satellite company was Voom ... who could not pull off a successful service with 13 transponders (11 licensed, 2 temporary). I don't see a two transponder operation being feasible but the FCC holds out hope.
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#35 OFFLINE   Laxguy

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Posted 04 August 2013 - 08:52 AM

Thanks. An interesting situation!


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#36 ONLINE   longrider

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Posted 04 August 2013 - 10:26 AM

One thing no one has mentioned is that pay TV is a mature market, at least in the US.  Anybody who wants pay TV has it, a new entrant would only take customers from other providers. What advantage is there to anybody in splitting the pie into smaller pieces, especially considering the very high capital costs of setting up a satellite service? Even phone companies have realized that the upgrade costs to their physical plant is not cost effective, Verizon has put FIOS expansion on hold and since the CenturyLink purchase I have not heard a word about Qwest's attempt to get into the TV business.

 

On the competition/pricing issue I am not too concerned as the fact is the great majority of satellite customers are urban and satellite is just a choice, not necessity. As much as I dislike cable I know I would switch if it was 20 -30% cheaper and I doubt they are willing to give up that many customers


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#37 OFFLINE   Drucifer

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Posted 04 August 2013 - 10:31 AM

They didn't raise their prices for three years, a promise they made when the merger was proposed. Since the 2008 merger they have raised the base price from $12.95 to $14.49 a month. A $1.45/mo increase in five years. Not bad.

Although, I'm not sure it's a fair comparison with DIRECTV and Dish. SiriusXM has much more competition...most of which it free.

Mike

 

And the choice to choose is gone.


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#38 ONLINE   TheRatPatrol

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Posted 04 August 2013 - 10:48 AM

since the CenturyLink purchase I have not heard a word about Qwest's attempt to get into the TV business.


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#39 OFFLINE   raott

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Posted 04 August 2013 - 10:51 AM

They didn't raise their prices for three years, a promise they made when the merger was proposed. Since the 2008 merger they have raised the base price from $12.95 to $14.49 a month. A $1.45/mo increase in five years. Not bad.

Although, I'm not sure it's a fair comparison with DIRECTV and Dish. SiriusXM has much more competition...most of which it free.

Mike

 

Instead of raising their prices, within a year of the merger they: began charging almost $3 a month for internet access, which was free pre-merger; raised a rates on multiple radios by about 30%; and added a "music royalty fee".  Whether the base price was not changed is meaningless when the out-of-pocket cost post merger was substantially higher than pre-merger for many customers.


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#40 OFFLINE   Laxguy

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Posted 04 August 2013 - 11:44 AM

On the competition/pricing issue I am not too concerned as the fact is the great majority of satellite customers are urban and satellite is just a choice, not necessity. As much as I dislike cable I know I would switch if it was 20 -30% cheaper and I doubt they are willing to give up that many customers

I doubt that even the majority of sat. subs are urban. Where does this info. come from? 


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#41 ONLINE   longrider

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Posted 04 August 2013 - 12:03 PM

I doubt that even the majority of sat. subs are urban. Where does this info. come from? 

Honestly that was an assumption from my observations that I see just as many dishes in the suburbs as I do in rural areas and that 83% of the US population lives in urban areas. Reexamining it I realize my observation is biased by the fact that out west there are no real high density areas however I still would have a hard time believing that a satellite company would sacrifice a good percentage of urban customers by going crazy with pricing


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#42 OFFLINE   Laxguy

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Posted 04 August 2013 - 12:08 PM

Agree with your conclusion. When I think "urban" I exclude "suburban", so there'd be a big gap in our respective numbers. I'd still love to see definitive numbers on satellite groupings especially: Those with choices besides satellite; those with good choices besides satellite, and those who can get only satellite. 


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#43 OFFLINE   James Long

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Posted 04 August 2013 - 12:28 PM

Urban has more competition and harder to place dishes. OTARD helps if the dish can be placed within OTARD's protection but otherwise one has to rely on their landlord or own the property. Suburban areas have more options for dish placements and more single family homes with exclusive use areas. But there is still competition from at least a cable company and OTA. Rural areas get away from cable competition and even OTA can be lost - and the Internet may be hard to get. There are some areas satellite has a hard time reaching and others where it seems to be the only option.

 

Is there effective enough competition to allow a merger between the only two satellite providers?


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#44 OFFLINE   speedy4022

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Posted 04 August 2013 - 12:35 PM

I can't stand dish if DirecTV becomes dish I will switch to cable.

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#45 OFFLINE   Laxguy

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Posted 04 August 2013 - 01:25 PM

@ James: I say, NO!! But my voice doesn't count for much at the Justice Department....or the FCC.


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#46 OFFLINE   slice1900

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Posted 04 August 2013 - 02:11 PM

I don't think there should really be any concerns as far as competition, since satellite competes with many cable companies as well as OTA and broadband options for some people (depending on their viewing habits)

 

While it is true that there are some people for whom satellite is the only option, that's not really a problem because there isn't discriminatory pricing of satellite depending on where you live, as there is for cable. As an example, where I live there is only one cable company. A slightly larger city a half hour to the north has the same cable company, plus a second one. My cable company's prices are about $15 less per month for the same exact package in the other city, because they have competition and we do not.

 

Satellite doesn't work that way, a Directv subscriber in the middle of nowhere who has no cable or broadband option pays the same for Directv as someone in a big city who has four cable companies and a ton of broadband choices. All subscribers pay the same price nationwide, based on their package, other than a few dollars more in areas that have a lot of RSNs.

 

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. The money that would cost them would far outweigh them being able to make more money from the people who have no or only one alternative - and obviously even they all have some point where they'd go without TV entirely if the price was increased too much.

 

Buying out Dish would allow Directv to either become more profitable while still charging the same prices, or become more profitable by lowering prices and adding even more subscribers. 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. It would take several years at a minimum. But they'd never need to launch any new satellites for the Dish subscribers, and if the Dish Network satellites still had some useful life left after they switched everyone over to Directv, they could be sold/rented to others similar to what they did with the old 72.5* satellite that Russia is leasing.


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#47 OFFLINE   Mike Bertelson

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Posted 04 August 2013 - 02:59 PM

And the choice to choose is gone.

Ummm....There's a lot of choices. It's radio and while there's only one satellite source there are still plenty of choices...most of which is free.

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Since it costs 1.66¢ to produce a penny, my 2¢ worth is really 3.32¢ worth.  That 3.32¢ is my own and not the 3.32¢ of DIRECTV, Dish, or anyone else for that matter.


#48 OFFLINE   Mike Bertelson

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Posted 04 August 2013 - 03:02 PM

I can't stand dish if DirecTV becomes dish I will switch to cable.

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If a merger does happen it's years, maybe even a decade out.

Mike

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Since it costs 1.66¢ to produce a penny, my 2¢ worth is really 3.32¢ worth.  That 3.32¢ is my own and not the 3.32¢ of DIRECTV, Dish, or anyone else for that matter.


#49 OFFLINE   Mike Bertelson

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Posted 04 August 2013 - 03:09 PM

Unless you live in a rural location. DirecTV or Dish is the only option where I live. No cable TV, much less cable broadband. We do have DSL from CenturyLink, when it works. So if you are in rural America, there is virtually no competition.

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.

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Since it costs 1.66¢ to produce a penny, my 2¢ worth is really 3.32¢ worth.  That 3.32¢ is my own and not the 3.32¢ of DIRECTV, Dish, or anyone else for that matter.


#50 OFFLINE   bobvick1983

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Posted 04 August 2013 - 03:12 PM

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.

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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.

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