Will DIRECTV & EchoStar Merge? Speculation is rising at industry conferences and in newspaper accounts.
By Phillip Swann TVPredictions.com http://www.tvpredictions.com/satmerger071706.htm Washington, D.C. (July 17, 2006) -- What's the hottest rumor in television today? Satcasters DIRECTV and EchoStar will soon announce a merger. A deal joining the nation's top satellite TV services has been speculated about for months. However, the rumors have suddenly escalated in the last few weeks with reports coming from last week's Allen & Co. media and technology conference in Idaho. "Also floating through the mountain air was the perpetual rumor about a buyout of EchoStar, the satellite television company owned by Charles W. Ergen, who also attended the conference," The New York Times reported. And a Reuters news article last week quoted Wall Street analysts as saying that the upcoming presidential election in 2008 could spur a wave of mergers (including DIRECTV-EchoStar) due to concerns that a Democratic administration would be less likely to approve them. "I think if there's any prospect for (a DIRECTV-EchoStar) deal at all ... it almost certainly has to be in a Republican administration," Craig Moffett, a media analyst at Sanford C. Bernstein & Co., told Reuters. DIRECTV and EchoStar also helped fuel merger speculation this month when they teamed up to bid in next month's U.S. auction of wireless airwaves. And last March, Mike Palkovic, DIRECTV's chief financial officer, told an industry conference that his company was interested in buying EchoStar. While Palkovic noted that the acquisition would face regulatory hurdles, he said: "We'd be nuts not to look at it." He even said the merger would be "desirable" even if it wasn't "feasible." If the rumors prove to be true, the joining of the two companies would enable them to consolidate resources and offer more services to compete with the cable TV industry. Both DIRECTV and EchoStar are investing heavily in new satellites (and other infrastructure) to improve their High-Definition TV offerings. Swanni Sez: The Federal Communications Commission rejected EchoStar's attempt to buy DIRECTV in 2002, saying the deal would stifle competition in the satellite TV industry. (DIRECTV and EchoStar represent more than 95 percent of the satellite audience.) However, the deal should not be entirely dismissed for three reasons. 1. Better Politics The FCC's decision to reject the earlier EchoStar-DIRECTV deal was based in part on EchoStar's clumsy handling of the case. Led by Charlie Ergen, its irascible and always unpredictable CEO, EchoStar alienated key FCC members and staffers by repeatedly failing to submit key documents on time. The company also did a poor job of lobbying both FCC officials and congressional lawmakers. Now led by the powerful and savvy News Corp. (and its omnipotent chairman, Rupert Murdoch), DIRECTV would not make the same mistake. 2. Better Lobbying Four years ago, Murdoch's News Corp. launched a massive (and effective) lobbying campaign to block the EchoStar-DIRECTV deal. Why? Murdoch wanted to buy DIRECTV himself. So, using his considerable influence in Washington, Murdoch helped orchestrate the deal's demise. (After the merger fell through, News Corp. purchased a controlling interest in the satellite TV service.) If DIRECTV decided to buy EchoStar, Murdoch's D.C. connections -- and money -- could perhaps get the deal approved. 3. More Competition With the launch of new TV services from telcos Verizon and AT&T, News Corp. could argue that competition within the satellite category is not as important as it was four years ago. In some cities, viewers can now choose from three TV providers -- cable, satellite and telephone. ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 antunes at uh dot edu Reply with a "Thank you" if you liked this post. _____________________________ MEDIANEWS mailing list [email protected] To unsubscribe send an email to: [EMAIL PROTECTED]
