State of Satellite TV
(October 24, 2006)
Despite the distant network bomb dropped on EchoStar last week, conversations about the current state of the DBS industry have been getting picked up on the radar for the past two quarters. Halfway through the year it was the prospect of a DIRECTV/DISH merger that had everyone talking. Now, with the merger talk subdued, a handful of alternative scenarios have emerged instead.
According to Bernstein Research's Craig Moffett, the focus at DIRECTV has shifted to John Malone - the "cable baron now recast as hero to (the company's) shareholders." And although the urgency to get a deal done with Malone has "significantly diminished," momentum towards the media ownership swap still appears high, he said.
Forgetting momentarily about EchoStar's recent court case defeat, investors continue to discuss the possibility that AT&T - current distribution partner and future IPTV competitor - will emerge as a buyer. But whether the telco giant sees value in the company is beside the point, Moffett said, and "investors shouldn't be misled into believing EchoStar fills a strategic need for AT&T."
Acquiring EchoStar, the analyst said, "would bring with it a separate network, separate capex, separate opex, and separate receiving equipment, and would offer exactly zero cost synergies, would do nothing to address cable's core advantage of multiple services on a single network."
On top of all this, Moffett said, the DIRECTV/DISH merger hasn't quite died, yet. Optimists have focused on a DBS merger's prospects in front of an FCC that's cutting deals left and right. Pessimists see the Department of Justice being the real block, and Moffett said the deal will remain unfeasible in the eyes of the DOJ.
( Source: http://www.skyreport.com/view.cfm?ReleaseID=49#Story3