Dish Floats DirecTV Merger, Because What's A Little Mindless Monopolization Among Friends?

Deals

from the merge-ALL-the-things dept

We just got done with AT&T’s $86 billion merger with Time Warner, a deal that immediately drove up costs for consumers and competitors alike. That was followed up with the recent approval of T-Mobile’s $26 billion merger with Sprint, another deal the lion’s share of objective experts say will reduce competition, raise rates, and end with thousands of pink slips as redundant positions are inevitably eliminated.

With the ink barely dry on both deals, Dish CEO Charlie Ergen is now (once again) floating a merger with DirecTV, insisting that such a union is “inevitable” as the company continues to reel from TV cord cutting. As the US press loves to do, the proposal was parroted rather unskeptically as a seemingly good idea:

“Ergen also on the call said a long-rumored merger of DirecTV and Dish was “inevitable” ? despite reticence from AT&T to divest itself of the asset ? as neither satellite TV-delivered linear TV service was growing…”You just can’t swim upstream against a real tide of big players,” Ergen argued. If AT&T eyes possible buyers for DirecTV, Dish is seen as an obvious suitor, especially after it tried and failed to merge with the satellite TV provider in 2002. Ergen on the afternoon analyst call also made another overture to the Sinclair Broadcast Group to possibly conclude a deal that would see the former Fox Regional Sports Networks return to his distribution platforms.”

To be clear, AT&T isn’t likely to sell, but in the wake of recent court rulings and mindless M&A mania you can’t rule anything out. AT&T bought DirecTV to gain additional scale and leverage in programming negotiations. Even with the service bleeding TV subscribers, it’s not likely that it would want to offload DirecTV to Dish anytime soon, as it wants to slowly convert those satellite TV users to AT&T streaming subscribers. AT&T’s also facing a massive merger backlash for $150 billion in debt caused by its costly obsession with merger mania, likely making AT&T sheepish.

You used to be able to look at a deal proposal like this and laugh at the mere mention of it, knowing it would likely be blocked. But in the wake of the utterly myopic and idiotic court rulings governing both the Time Warner/AT&T and Sprint/T-Mobile deals (in which mountains of evidence of market harm were almost flippantly and cheerfully ignored), you really can no longer make those assumptions. The US loves it some mindless merger mania; almost as much as it loves ignoring the monopolistic damage such deals cause on tech markets and consumers alike.

Merging AT&T directly with Dish, the only way this deal actually gets done, creates layers of problems. To get the T-Mobile merger approved, the DOJ signed off on a plan that would shovel some T-Mobile spectrum over to Dish Network, which would (theoretically) then build a replacement wireless carrier to Sprint over a period of seven years. Analysts and antitrust experts are already hugely doubtful that network ever gets built. But it would be even less likely to get built should Dish be sold to DirecTV/AT&T, which has a vested interest in ensuring a fourth replacement wireless competitor never materializes.

This deal probably never happens. Dish and DirecTV have floated these kinds of rumors for years just to fluff their stock valuations. Still, recent antitrust enforcement decisions have shown there’s no bottom to US M&A myopia, meaning you can’t rule such a deal out. Wall Street and executive desires seemingly mute all common sense and any interest in historical context, ensuring we learn absolutely nothing from history as we repeat the same mistakes over, and over, and over again.

Filed Under: antitrust, charlie ergen, competition, consolidation, doj, ftc, satellite tv
Companies: at&t, directv, dish