DIRECTV-EchoStar Merger: 5 Reasons Why It Won't Happen The summer's hottest rumor could be no more than hot air.
By Phillip Swann TVPredictions.com http://www.tvpredictions.com/mergerno080206.htm Washington, D.C. (August 2, 2006) -- In recent weeks, EchoStar's stock has been rising on rumors of a merger with satellite rival DIRECTV Rupert Murdoch, chairman of News Corp., the controlling parent of DIRECTV, says the feds would likely approve the deal. And Wall Street analysts and journalists are giddy over the possibility, even speculating about which executive would run the new company. But what if the DIRECTV-EchoStar merger rumor is just that -- a rumor? What if the two companies aren't even discussing a deal? Today, TVPredictions.com examines the five reasons why there won't be a merger between the nation's two leading satellite TV services. On Friday, we will look at the five reasons why it might occur. And next week, we will have a prediction on whether it will happen. So, now, here are the five reasons why there won't be a merger between DIRECTV and EchoStar: 1. Company Friction News' Murdoch and EchoStar CEO Charlie Ergen have butted heads for nearly 10 years, dating back to 1997 when the two companies unsuccessfully tried to merge. The deal fell through soon after Ergen had a shouting match with News executive Preston Padden. Although Murdoch now calls Ergen "my friend," it may be difficult for the two brilliant but stubborn executives to reach agreement over such matters as who would run the company. 2. Government Regulators The Federal Communications Commission rejected a DIRECTV-EchoStar merger in 2002 on grounds that it would be anti-competitive; the commissioners feared that a lack of competition in the satellite industry would result in higher programming fees. The TV industry has changed in four years due to the entry of the telephone companies and online video services. However, it's an election year. Does the federal government want to approve a deal that the voters might see as causing higher prices for their satellite service? 3. Logistical Difficulties DIRECTV has more than 15 million subscribers while EchoStar now has nearly 13 million. The merging of the two companies would create a number of logistical, marketing and technical challenges, such as branding and satellite integration. Memories are still strong of the difficulties encountered by Time Warner and AOL executives when their companies merged. 4. Competitive Concerns The merger would likely force company executives to focus almost entirely on getting the deal approved -- and successfully integrating the two units. Consequently, for 12-18 months after the deal was announced, the new DIRECTV-EchoStar might be less competitive in the marketplace. 5. The Cat's Out of the Bag History shows that successful mergers are often kept secret until the deal is announced. Behind closed doors, it's easier to negotiate sticky issues such as executive rank and ownership splits. However, the rumored DIRECTV-EchoStar merger has been discussed publicly by everyone from Murdoch to Ergen to even DIRECTV's chief financial officer. It seems unlikely that they would be commenting so liberally if the deal was imminent. ================================ 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]
