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SkyBOX: Gaming DIRECTV
Posted 11 December 2006 - 07:56 AM
of a Liberty-majority for DIRECTV? Our best
guess... absolutely nothing."
by Evie Haskell, Mediabiz.com
So Rupert Murdoch, whose loyalty appears to run strictly to blood, is reportedly ready to dump DIRECTV in favor of buying back Dr. John Malone's dynasty-threatening piece of News Corp. And Malone, according to media mutterers, is ready to take on DIRECTV as a key player in his vast, Liberty-from-taxes mutual fund game. The chattering classes outdid themselves on this subject last week. Most of the noise came from analysts and consultants of all stripe spewing out their "what this means" scenarios. Among the most common of these were:
Ergen wins the low end!
The thinking here is that, with Liberty as its main backer, DIRECTV will be less competitive on the low-end market, leaving the door wide open for Charlie's "low-cost" marketing. That could be. But don't forget that Dr. John Malone's old TCI cable system was best known for the horrendous condition of its physical plant. This leaves us to suspect that Malone is unlikely to invest in DIRECTV's infrastructure/technology ... and thus its appeal to the high-end market.
Liberty programming assets win!
In this scenario Malone will use DIRECTV's clout as the second largest multiplatform operator to insure carriage, at good terms, for Liberty's many programming assets ... ie Starz, Discovery, et al. We'd say this one is a "duh." Beyond tax avoidance (which this deal accomplishes) leverage is one of Malone's favorite games. For sure he'd play the leverage card here.
A merger moment is here!
Since Dr. John is a dealer, not an operator, folks are naturally casting around for a suitable buy-out partner for DIRECTV (either with Liberty buying or, more likely, the partner buying). EchoStar naturally comes up as a potential and we'd agree with that except that Charlie Ergen likes to win it ALL and we just don't see Malone as the patsy in DBS poker. More likely, we'd guess, would be a Bell-DIRECTV hook-up as the good Doctor has lured the Bells in before, and could well do so again.
Outside of these scenarios, what would likely be the immediate impact of a Liberty-majority for DIRECTV? Our best guess is ... absolutely nothing. In fact, we'd bet that the same management team will pursue the same basic strategies for some time to come. Whatever else Malone may be, he is not a micro-manager, nor an operator. So the near term course for DIRECTV will most likely be steady as it goes which should give the chattering classes plenty more time to chatter about what it all means.
www.SkyReport.com - used with permission
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