Dish, DirecTV Eye Irrelevant Oblivion Via Pointless Last Gasp Merger

Deals

from the growth-for-growth's-sake dept

AT&T’s $86 billion merger with Time Warner resulted in an ocean of chaos, layoffs, and quality control problems. That was followed up with T-Mobile’s $26 billion merger with Sprint, which resulted in thousands of layoffs and an immediate end to wireless price competition in the U.S.

Not to be outdone, struggling satellite TV providers Dish Network (owned by Echostar) and DirecTV (partially owned by AT&T) are once again considering a merger in the hopes that this will somehow save both dying businesses from looming irrelevance:

“AT&T Inc and joint-venture partner TPG Inc are in talks to combine their DirecTV service with Dish, Bloomberg News reported on Friday, citing people familiar with the matter. The discussions between DirecTV and Dish parent EchoStar Corp are in early stages, people told Bloomberg News, cautioning that an agreement has not yet been reached.”

Rumors of such a deal have appeared occasionally for as long as Techdirt has existed. But now there’s a certain fresh desperation with the proposal, as both companies struggle to maintain satellite TV’s relevance in the streaming TV era.

Dish, you might recall, was supposed to have built a competitive new 5G network as a supposed Trump era “fix” to the competitive harms caused by the Sprint T-Mobile merger. But Dish has been bleeding cash for several years and its promised 5G network is widely seen as a joke.

DirecTV, you might recall, was purchased by AT&T as part of that company’s plan to dominate the video advertising sector. But that effort ultimately proved to be a disastrous money sink as well, resulting in a mammoth loss for AT&T and a steady tactical retreat.

Analysts at Citi insist the merger involves a “high degree of industrial logic” as the two dying companies try to obtain newfound scale to compete in streaming. But I’d suspect this new deal will go about as well as the last several; such proposals generally exist to temporarily goose stock valuations and provide large tax breaks for executives (like Dish’s Charlie Ergen) who are completely out of original ideas.

Like AT&T’s effort to dominate video and Dish’s effort to dominate wireless, this combined venture likely accomplishes nothing outside of countless billable hours for both companies’ attorneys. And a lot of headaches for consumers and employees as the debt-ballooning distraction makes service quality and employment security at both companies’ inevitably worse.

Filed Under: charlie ergen, mergers, satellite, streaming, telecom, television, tv, video
Companies: at&t, directv, dish, echostar