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


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#41 OFFLINE   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 ONLINE   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 ONLINE   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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#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.

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#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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#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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#51 ONLINE   Laxguy

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Posted 04 August 2013 - 03:15 PM

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'm sorry, but those concepts are anathema to free markets- we've still got some left! 


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#52 OFFLINE   James Long

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Posted 04 August 2013 - 03:18 PM

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.

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. :)
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#53 OFFLINE   raott

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Posted 04 August 2013 - 03:23 PM

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.


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#54 OFFLINE   bobvick1983

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Posted 04 August 2013 - 03:26 PM

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.

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#55 ONLINE   Laxguy

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Posted 04 August 2013 - 03:27 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.

 

 Yes, and post earlier by Slice is worth a read.


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#56 OFFLINE   JoeTheDragon

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Posted 04 August 2013 - 09:40 PM

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.

well the RSN fees in some areas change that a bit and for the most part match what the big cable co do as they price very from area to area.


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#57 OFFLINE   wilbur_the_goose

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Posted 05 August 2013 - 05:29 AM

The day there's a merger is the day I switch to Verizon FiOS.  I really hate Charlie- runs the meanest company in the country.  http://www.businessw...pany-in-america


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#58 OFFLINE   gov

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Posted 05 August 2013 - 08:39 AM

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.



#59 OFFLINE   Diana C

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Posted 05 August 2013 - 09:16 AM

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.


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#60 OFFLINE   lokar

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Posted 05 August 2013 - 10:37 AM

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. 






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