According to a report published by Bloomberg earlier today, Dish Network Chairman of the Board Charlie Ergen recently approached DirecTV CEO Mike White in order to chat about the possibility of merging the two companies. Likely influenced by the recent news of the Comcast acquisition of Time Warner Cable, a merger of the two satellite companies would create a total subscriber base of 34 million consumers. While DirecTV has 20 million paying subscribers compared to 14 million at Dish, Dish Network also has spectrum holdings valued at $26 billion.
Sources within the two companies indicate that White is concerned about starting up an official discussion on a possible merger due to the regulators. White is worried that regulators would attempt to block the merger since the two companies compete directly. It’s possible that White will simply wait to see what happens with the Comcast acquisition in the coming months in order to see if the Department of Justice and Federal Communications Commission (FCC) decide to block that merger.
Interestingly, a Dish Network and DirecTV merger attempt during 2002 was blocked by the FCC. Speaking about the decision to deny the merger during 2002, former FCC chairman Michael Powell said “The combination of EchoStar and DirecTV would have us replace a vibrant competitive market with a regulated monopoly. This flies in the face of three decades of communications policy that has sought ways to eliminate the need for regulation by fostering greater competition.”
Assuming Dish Network is open to other partners, mobile service providers would likely be interested in Dish’s spectrum portfolio. Speaking about Dish Network’s options to Bloomberg, BTIG analyst Walt Piecyk said “Given the rapidly changing industry dynamics, everyone should be talking to everyone, and if you’re not you might be left behind. I highly doubt that DirecTV is the only company that Ergen has spoken with. This should serve as a reminder to AT&T and Verizon that a strategic asset has other options that could make Dish un-buyable in the future.”
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