Still Thinking DBS Merger? Again, Don't Count on It

[FCom911]

Still Thinking DBS Merger? Again, Don't Count on It
Monday, August 11, 2008

(SkyReport) There are still lingering suggestions that the nation's two DBS platforms - DISH Network and DIRECTV - could pursue a merger.

And there are more voices who say a combination of small dish companies isn't likely going to happen.

In a note released Friday, Blair Levin of Stifel Nicolaus says his take on a possible DBS combination "suggests that neither the market facts nor the government's approach has changed enough to significantly improve the possibility of a DBS merger being allowed for a few years." The analyst said a single satellite TV company would create a monopoly in rural areas and a duopoly for tens of millions of other consumers.

Even with competitors like Web video and telco video platforms, DBS' market presence is "enough to cause the Justice Department to say no, in our opinion," says Levin.

Proponents of a DBS merger point to the recent combination of XM and Sirius as a potential positive for a satellite TV deal. However, Tom Eagan of Collins Stewart says, "Unlike the satellite radio merger, where the two players were considered to compete with myriad sources of audio, satellite TV is different."

A large number of rural households rely on satellite TV for television. "A DISH/DIRECTVTV merger would create one company as a source of TV for much of rural America, a prohibitive situation with the FCC and the DOJ," Eagan said.

The companies have attempted to merge operations, but the deal was blocked by regulators in 2002.

 

[cparker]

That whole "monopoly in rural areas" is a load of horse hockey. I LIVE in a rural area. My phone company is a "baby Bell". I don't have access to Verizon or Bell Atlantic, or anything like that. I have one choice for a phone company and that's it.

Is that not a monopoly? They can charge whatever they want, include or exclude whatever services they want... and I don't have a choice because they're the only game in town..... literally.

So... while I really don't personally favor a merger, because I think competition is a good thing.. I just ain't buyin the whole "monopoly in rural areas" garbage. People in rural areas are USED to monopolistic practices. They suck, but what you get in response is... "Well YOU wanted to live out in the country!"

nice......

 

[10fthdscreen]

Merger will still be talked about, there always an anylist here and there that says things that don't pan out

 

[MikeD-C05]

There are many ways that the two sat companies could have the benefits of a merger without an actual merger and still save bandwith and money. They could form an independent third company that did locals for both sat companies and share the uplinks and stop duplicating the effort on all those channels. This company could be run 50/50 by both sat companies . They could share in some kind of internet venture or form an independent company that does video on demand over the internet. They could form an independent company that does nothing but HD . The point is that they don't have to actually merge to do these things. Besides CHarlie wouldn't give up total control of a merged company anyway.

 

[Stacy A]

That whole "monopoly in rural areas" is a load of horse hockey. I LIVE in a rural area. My phone company is a "baby Bell". I don't have access to Verizon or Bell Atlantic, or anything like that. I have one choice for a phone company and that's it.

Is that not a monopoly? They can charge whatever they want, include or exclude whatever services they want... and I don't have a choice because they're the only game in town..... literally.

So... while I really don't personally favor a merger, because I think competition is a good thing.. I just ain't buyin the whole "monopoly in rural areas" garbage. People in rural areas are USED to monopolistic practices. They suck, but what you get in response is... "Well YOU wanted to live out in the country!"

nice......

cparker, I have to agree with your sentiments. I live in a rural area and I have been fussing at, about, and running down my telephone co-op for several years now because they are the only game in town - and have made no effort whatsoever at bringing wi-fi or DSL, or ADSL, or any broadband to their members. I get very angry at the telephone co-op about this. Having said that, I used to think that Direct and Dish merging would be a good thing - back when Dish was trying to buy D*. But now I really don't. I think it really would lead to higher prices and stunted growth of HD services. What my telephone co-op needs is a little competition to kick their ass in gear and start offering things people want, which is something that D* and E* are doing to each other right now.

 

[Jim5506]

I hope they do not merge, because innovation and improvement of service and channels would go right out the door.

Dish has been pushing DirecTV for years ion the technical side, dragging them along into HD, band stacking DVR's , now 1080p VOD who can guess where they'll think of something next great idea.

A merger blows this all up.

Dish will innovate and survive, even prosper because of it.

 

[Sammy033]

That whole "monopoly in rural areas" is a load of horse hockey. I LIVE in a rural area. My phone company is a "baby Bell". I don't have access to Verizon or Bell Atlantic, or anything like that. I have one choice for a phone company and that's it.

There is a difference between a pre-existing monopoly and creating a new one. You only have one choice in telephone service because others have not yet decided to expand there yet... if they ever will. I hope they do because the only monopoly I like is the game.... especially when I am the banker.

In any case, if there was such competition in your area and the govt decided to allow a merger creating a monopoly then I will shut my mouth.

 

[jegrant]

The only way I could see it working is if the technical backend merged, but the actual channels were still packaged and sold by two different retail companies. To provide economies of scale, perhaps the two companies could negotiate as a single entity when it comes to what programmers would be paid wholesale (both local and national channels) but still offer different packages at different prices to consumers.
Also, it's somewhat likely that the additional satellite capacity (resulting from the savings of only sending one copy of each channel instead of two) would find some of it dedicated to providing extra space for public interest channels (at least 7% instead of the current 4%, possibly as much as 12%) and "qualified entities" would likely also get a 7 to 12 % slice. There would likely also be some additional must carry obligations. Although I don't think satellite could or should ever be required to carry every single stream of every single station, perhaps stations could be given "shelf space" on Video on Demand instead. Or, for large station groups like ION, PBS, and the like, it would only take about 10 channels or so to carry all the "national" subchannels offered. Maybe 15 if you also carry TBN's subchannels.


Also, picture quality of a merged entity should be regulated by a board with this composition:
Two members from the merged satellite TV company.
Two members that represent rural area satellite subscribers.
Two members that represent urban area satellite subscribers.
Two members that represent commercial programmers.
One member that represents public interest programmers.
The merged sat TV provider would have no control over the selection of any board members except the two representing them. Perhaps the consumers are selected at random, on a rotating basis, and the programmer members would be chosen at random from a list to which every programmer carried could nominate one representative.
The merged entity should be free to use any technology to improve PQ, but the board would have the power to prevent new channel additions or remove them, if they are shown to negatively impact PQ according to a simple majority of the board. (Ideally, new channels would be added in a test mode first, available only to board members' receivers as well as internally at the sat tv provider. Then board members could assess impact on PQ.)