Shares in Dish Network parent EchoStar climbed 7% in early Monday trading, following reports by Bloomberg that the satellite TV provider is discussing a merger with DirecTV.

It’s not the first time Dish Network-parent EchoStar has entered discussions with DirecTV, with EchoStar chairman Charlie Ergen regularly stating for years that he believes such a tie-up is “inevitable.” 

In fact, the FCC blocked a formal proposal to merge the two once in 2002, citing antitrust concerns.

But according to MoffettNathanson analyst Craig Moffett, the waning market power of these two struggling satellite TV businesses may actually work in their favor this time.

Also Read: Dish and Sling TV Revenue Collapses, Down a Record 10% in Q2

Back in July 2021, just before AT&T spun off DirecTV into a separate entity, the pay TV company had 15.412 million remaining subscribers.

According to a DirecTV source, that number has fallen to around 11 million.

Moffett says that, in light of such unchecked subscriber losses, “it’s hard to imagine that regulators would block a deal.”

But given that there are “no synergies” between the companies’ satellite portfolios (which operate on two different conditional access technologies), a merger would likely provide very limited benefits.

“The biggest synergy would once have been to eliminate churn,” Moffett explained. “But today they each capture so few gross additions that cutting them, potentially even in half, wouldn’t amount to much.”

While DirecTV and Dish could benefit from the merging of their ground facilities and G&A, that single sector likely won’t be enough to keep the business afloat for more than a year.

"It’s hard to argue that a merger shouldn’t happen; it clearly should. Consolidation during a period of secular decline is always to be expected,” wrote Moffett. “But it would be a mistake to overestimate its importance. Adding a year or so to the expected life of satellite TV isn’t going to change the narrative for programmers, distributors, or even for satellite TV.”

A 19-hour July 8 broadband service outage for Rogers Communications customers that disrupted airlines, banking and 911 calls has prompted the Canadian government to investigate the matter, a move that some say could throw a wrench into Rogers’ pending C$20 billion merger with Shaw Communications. 

Rogers, the largest telecom company in Canada, blamed the outage on a network system failure that occurred during a planned maintenance update. In a statement on its corporate website on July 9, Rogers CEO Tony Staffieri said the problem had been addressed and its systems are now operational. 

“We know how much our customers rely on our networks and I sincerely apologize,” Staffieri said in the statement. “We’re particularly troubled that some customers could not reach emergency services and we are addressing the issue as an urgent priority.”

He added that all customers would receive a credit automatically applied to their accounts for the outage. Some reports put the cost of those credits at between C$65 million and C$75 million. 

But the biggest impact could come in the form of more intense scrutiny of the Shaw deal. Canadian regulators already are looking closely at the merger — and in June, both Rogers and Shaw said they would delay the closing of the deal as they worked out any issues the government may have. 

The latest service outage has caused some regulators to wonder if it’s a good idea to foster further consolidation in the industry. About 90% of the Canadian telecom market is controlled by three companies, Rogers, BCE and Telus.   

In a press conference on July 11, Canada Industry Minister François-Philippe Champagne said he directed Canadian telecom companies to help each other during emergencies and develop protocols to keep customers informed during outages. According to Reuters, Champagne has give the three telecom giants 60 days to enter inter a formal agreement. 

In a statement, Canadian Radio-television and Telecommunications Commission (CRTC) chairperson and CEO Ian Scott said the regulatory body ordered Rogers to answer a series of questions concerning the outage and provide a comprehensive explanation as to why it occurred. Rogers has until July 22 to respond.  

“This widespread network outage not only disrupted Canadians and Canadian businesses across the country, it prevented access to services such as 911 and emergency/public alerting as well as other critical infrastructure services,” Scott said in the statement. “The CRTC is requesting a detailed account from Rogers as to ‘why’ and ‘how’ this happened, as well as what measures Rogers is putting in place to prevent future outages. We take the safety, security, and wellness of Canadians very seriously and we are responsible for ensuring that Canadians have access at all times to a reliable and efficient communications system.”

According to Reuters, citing merger arbitrage traders, the chances that the deal would be completed fell to 62% on Monday (July 11) from 88% a week prior.  

Shares of Rogers fell 5% on July 11 to $45.15 each. The stock rose 2.5% on July 12 to $46.27 each, sliding 0.2% in early trading July 13 to $46.17 per share. 

Shaw stock fell 4.6% on July 11 to $27.95 per share and continued to slide in subsequent trading, priced at $26.24 each on the afternoon of July 13, down 1.2%. ■ 

More than a year after they unveiled a merger valued at $20.6 billion that would create a cable and telecom powerhouse north of the border, Rogers Communications and Shaw Communications have agreed to put their union on hold as Canadian regulators grapple with the competitive aspects of the deal.

Rogers agreed to buy Shaw in a cash and assumed-debt deal valued at C$26 billion (US $20.6 billion) in March 2021. Among the benefits of the pairing were faster deployment of 5G wireless networks in Canada. Rogers, already the country’s largest provider of 5G service, pledged to invest C$2.5 billion (US$2 billion) in 5G networks across Western Canada, creating up to 3,000 new jobs. In addition, Rogers said it would create a C$1 billion (US$800 million) fund dedicated to connecting rural, remote and Indigenous communities to high-speed internet across the four Western provinces and spend another C$3 billion (US$2.4 billion) to support additional network, services and technology investments.

The deal was expected to close in the first half of 2022, but over the past few weeks Canadian regulators have expressed doubts about the deal. On May 9, Canada’s Competition Bureau said it was seeking to block the merger, “in an effort to protect Canadians from higher prices, poorer service quality and fewer choices, particularly in wireless services.”   

On May 30, both Rogers and Shaw said they would postpone the closing of the merger while they worked with regulators to iron out any concerns. 

“Rogers and Shaw strongly believe the Transaction is in the best interests of Canadian consumers, businesses and the Canadian economy, and that a settlement is the best path forward in ensuring that the benefits of the Transaction are fully and expeditiously realized,” the companies said in a press release.

The Canadian government’s main concern appears to be the combination of Rogers’ and Shaw’s wireless businesses. In the May 9 press release announcing its intentions, the Competition Bureau said that it has worked diligently over the past several years to diversify the Canadian wireless business, currently dominated by three operators -- Rogers, Bell Canada and Telus, with a combined 87% share of the market. Teaming Rogers with Shaw, according to the agency, would give the former access to the fourth largest wireless carrier’s 2.1 million Freedom Mobile customers, widening the gap between it and its closest competitors.

But what concerns the agency most is the impact the deal could have on pricing. According to the filing, Shaw has doubled its subscriber base since launching service in 2017 by aggressively pricing its service, offering bigger data allowances and other innovations. According to the agency, by its mere presence in the market, Freedom Mobile has forced the three largest carriers to retain customers, keeping prices down after they had been rising year-over-year.

“The Bureau’s investigation has concluded that competition between Rogers and Shaw has already been lessened – and the harm to competition will only worsen if the proposed transaction is allowed to proceed,” the agency said. “For this reason, the Bureau has filed an application for an order to block the proposed transaction.” 

Both Rogers and Shaw have said they would divest the Freedom Mobile business as part of the merger and that the process is advancing. Some reports indicate that Freedom’s buyer could be Xplornet Communications, a rural internet service provider owned by Stonepeak Infrastructure Partners. Stonepeak made news last year after buying Astound Broadband from TPG in a deal valued at $8.1 billion.

While the Competition Bureau’s objection to the merger could prolong the deal closing, few in the Canadian press believe it will quash the transaction, with several reports pointing to a recent attempt by the Bureau to block a merger between oil & gas waste services companies  Secure Energy Services and Tervita Corp., that was ultimately consummated.

Investors don’t seem too concerned either. Rogers stock was down 5% ($2.62 each) to $49.36 on May 9 when the Competition Bureau’s objection was first made known, but has climbed back, closing at $51.26 per share on June 2. Shaw stock has had the same trajectory -- it was down 8% ($2.35 each)  on May 9 to $26.73 per share, but has gained a lot of that back in subsequent trading, closing at $28.39 on June 2. ■

Dish Network chairman Charlie Ergen said Thursday that the satellite TV business would “melt away” without a merger between his company and DirecTV, but in addition to boosting that dying industry for a few more years, a merger could possibly serve another purpose -- funding Dish’s $10 billion wireless buildout. 

Ergen’s prediction that a DirecTV deal is inevitable has almost become a quarterly tradition. But continued speculation that a deal was more likely to happen now than ever -- fueled by dramatic subscriber declines at both companies -- helped drive Dish stock up by more than 11% Friday and 16% in the past two days. That helped erase the stock’s 2022 decline -- it was down 15% since December 31. But it’s still a long way from the $45 per share range the stock was trading at just five months ago.   

It’s been clear for years that Dish and DirecTV are basically shells of their former selves, and Dish shedding 273,000 video customers in Q4 -- well ahead of analysts’ consensus estimates -- is more proof that the satellite business needs help. Even Ergen seems to believe that time is quickly running out for the business.   

“I think it's inevitable that Dish and DirecTV go together,” Ergen said Thursday during Dish’s Q4 earnings conference call with analysts. “Otherwise, both companies will just melt away, and there'll be no service for customers. The regulatory reasons to not allow it, don't exist anymore.” 

Also: Satellite TV: Five Years, that’s All You’ve Got 

While there has been a lot written about the possible synergies associated with a DirecTV merger, Barclays Group media analyst Kannan Venkateshwar took a look at whether a deal could help Dish fund its $10 billion wireless network buildout. His conclusion: while regulatory hurdles are fewer, it will all come down to valuation.  

Dish has repeatedly said it will cost about $10 billion to build its 5G wireless network, and said Thursday that it expects capex to more than double this year to $2.5 billion from $1 billion in 2021 to pay for the network. Dish is expected to launch its first wireless market -- Las Vegas -- soon and revealed another 25 cities, including Dallas, Nashville, St. Louis and Oklahoma City, that will receive service in the coming months. Still, delays associated with difficulties surrounding integrating equipment and software from different vendors, and a snag regarding 911 emergency service have pushed back the buildout schedule. 

“We’re six months behind where we thought we’d be, and it’s my fault,” Ergen said on the conference call. “We just didn’t anticipate that we would have to do as much on the technical side.”

And though analysts have said in the past they believe the $10 billion buildout figure is surprisingly low, Ergen stressed that because its network configuration is different than any other provider -- he said it was more of an IT network than a wireless network -- the number is valid. 

“Because we're in the cloud, we can automate and do things and provision and other things that people can't do,” Ergen said on the call, adding that its labor costs are lower, too.

But it still is going to cost a lot. Analysts have noted that the $10 billion figure does not include tower leases for the service. In a research report, MoffettNathanson senior analyst Craig Moffett wrote that Dish has commitments for about $12.7 billion in tower leases, which is in addition to the $10 billion construction budget.

So where is Dish going to get the money for that? Ergen has said that funding is readily available, but some have wondered whether the source could be a merger with DirecTV.

Also: Does a Dish DirecTV Merger Make Sense? 

In January, the New York Post reported that Dish and TPG were in talks concerning a DirecTV merger deal, but so far neither side has confirmed that and there are no signs that a deal is close. 

Dish and DirecTV tried a merger before -- in 2001 -- but were blocked by government regulators who said a deal was anticompetitive. But the landscape has changed dramatically since then -- DirecTV and Dish combined have about the same number of TV customers that DirecTV alone had five years ago. But are still roadblocks to a combination. 

Venkateshwar also believed that regulatory challenges are fewer -- and could be even less if the government decided to impose broadband deployment conditions to a deal for both parties. AT&T already is committed to building out fiber broadband to rural markets. And Dish’s wireless offering is mainly targeted at smaller cities. Requiring the two expand their rural broadband footprint as a condition of a deal seems like a no-brainer.    

But what could derail a satellite TV deal, according to Venkateshwar, is valuation. 

The analyst pointed to AT&T’s sale of a 30% stake in DirecTV to private equity group TPG Capital, a deal that valued the satellite giant at $16.25 billion, about one-quarter the $65 billion AT&T paid for the asset back in 2015. And though he wrote that synergies in a deal could be significant -- between $1.5 billion and $2 billion -- valuation is where a transaction could hit a snag.

Venkateshwar estimated that the TPG deal valued DirecTV at about 3 times forward looking cash flow, but said the actual valuation could be lower considering non-cash fulfillment costs. 

“At these valuations, the deal will not make sense for Dish given the debt attached to its own DBS assets, as there may not be any equity value left at 3x EBITDA even including synergies,” Venkateshwar wrote. “A big difference in valuation between DTV and Dish would risk Dish implicitly walking away with a large part of the deal synergies and potentially future cash flow (if Dish continues to be an investor) in the combined company.”

That could be a problem for AT&T because its free cash flow guidance of about $20 billion pro forma for its WarnerMedia merger with Discovery relies on $1 billion in free cash flow from DirecTV. 

“This is why the transaction parameters may be difficult to narrow down, especially given Dish Chairman Charlie Ergen’s proclivity for an all or nothing approach to deal making and Dish’s own need for capital,” Venkateshwar wrote. 

There could be other deal structures, including having TPG invest in Dish prior to the assets being combined, or, like the WarnerMedia/Discovery transaction, Dish could split off the satellite TV assets before combining them and spinning it off to shareholders. 

“However, all these deals will require some flexibility from Dish to meet mid way to satisfy AT&T’s strategic needs, something that is not a given,” Venkateshwar wrote.

Dish could just sell the satellite TV asset outright and pocket the cash, but Venkateshwar added that, too, isn’t as easy as it sounds.

For starters, selling off the satellite TV business would remove a big cash generator for Dish, leaving it with a wireless business that isn’t generating as much revenue as its current free cash flow take. enough revenue  

“While the balance sheet would be much lighter in theory, raising further capital to fund its wireless business without any cash generating asset could become expensive,” Venkateshwar wrote. “This is why Dish will likely want a much higher valuation if it has to sell out of the asset, which is likely to make the deal less attractive for AT&T. This framework in essence highlights the challenges in negotiating the deal even absent regulatory issues.”

MoffettNathanson senior analyst Craig Moffett has said that a DirecTV merger would be good for both companies in the past, but he isn’t convinced it’s possible. Moffett wrote in a Thursday research note that a merger really depends on synergies, and given Dish’s gross subscriber additions, there aren’t many to be found in a combination of the two.

“A merger wouldn’t allow for consolidation of satellite fleets, nor would it change industry growth rates, but it would reduce the activity levels required to achieve those growth rates by cutting churn, and gross additions, roughly in half,” Moffett wrote. “But with gross additions this low, there isn’t much synergy opportunity left here.”

Nevertheless, Dish stock was up 11% Friday, in part because of merger speculation but also because Ergen offered more details on the wireless rollout and the apparent resolution to another dilemma -- T-Mobile’s decision to shutter its 3G CDMA network, the very platform over which most of Dish’s Boost Mobile customers receive service. Ergen said that T-Mobile will shut off the CDMA service on March 31, and that the two are working together regarding communications, handset supplies and incentives. That should make some investors happy.   

For the rest, Dish plans to hold an Analyst Day on May 10 -- its first in about 15 years -- where it hopefully will address any remaining doubts and questions. In the meantime, the stock continues to be fueled by what Dish might do, not necessarily what it is doing. ■

About a year after it purchased a 30% interest in DirecTV for a bargain price, private equity firm TPG Capital is reportedly in talks with Dish Network about a possible merger of the satellite giants, a move that while familiar, nevertheless managed to boost Dish stock about 10% in the past two days.

Dish shares were up about 4% ($1.43 per share) to $35.38 on January 11 and rose another 4% to $36.83 at 11:03 a.m. on January 12. 

The New York Post reported January 11 that TPG and Dish were in advanced talks concerning DirecTV, but that the deal has hit a potential snag amid Dish founder and chairman Charlie Ergen’s supposed demands for a big chunk of voting shares and a greater say in decision making for the combined company. Together, Dish and DirecTV would become the largest pay TV distributor in the country with about 23 million subscribers, edging out Comcast by a few million customers, but coming during a time when consumers have been canceling their pricey video subscriptions for streaming services.    

Talks of a Dish-DirecTV merger have been around for decades. The two first stepped to the merger podium in 2001, only to be shot down by federal regulators. With the satellite business in steep decline — Dish has lost 5 million TV customers and DirecTV has shed 10 million since 2017 — some have speculated that the government may be more open to a merger this time around.

Whether federal regulators would approve a deal this time isn't a given. Just two years ago, the U.S. Justice Department let Dish know that it would not sign off on a merger. Maybe that stance has softened, maybe not.

Ergen has said for years that he believed a merger with DirecTV was “inevitable,” and some have claimed a combined Dish-DirecTV would have about $1 billion in cost synergies. 

Every single business in the pay TV space — distributor, content provider, streamer — wants additional scale, and having 23 million TV subscribers (15 million from DirecTV, 8 million from Dish) would deliver that, at least for the short term. Federal plans to pump about $65 billion to help extend broadband into more rural markets could also bode well for a merger. 

From a financial standpoint, the idea that a deal could be done cheaply for the parties involved also makes it more palatable. TPG bought its 30% interest in DirecTV last year for a price that valued the entire company at about $16.5 billion. AT&T paid about $66 billion for DirecTV in 2017. 

Also: AT&T and TPG: There is No Why 

Still, on the surface, putting together two companies in steep decline only seems to prolong the inevitable race to zero customers. But others say that any delay to that apocalyptic conclusion could have some real economic value and short-term benefit for consumers. 

Also: Satellite TV: Five Years, that’s All You’ve Got 

In an email message, MoffettNathanson senior analyst Craig Moffett said that while he has no idea whether talks between the two companies are actually going on, a merger deal has made sense for a long time. 

“Satellite TV will remain the only available option for rural Americans for some time — rural broadband buildouts take time — and ultimately regulators will have to take that into consideration,” Moffett said in the email. “Is one stronger satellite operator better for rural Americans than two weaker ones?”

Sanford Bernstein media analyst Peter Supino said in an email that a merger seemed plausible because “the point is to capture the efficiencies of putting the two companies together.”

Also: Getting Rid of DirecTV Won’t Be So Easy 

He added that combined EBITDA would be billions of dollars more than what the two generate today, and there are opportunities to reduce programming, network, subscriber acquisition and retention costs, as well as general and administrative expenses (G&A).

And even though Dish has shifted its focus to wireless — it is currently in the throes of building out its network — a DirecTV combination could provide a valuable cache of future mobile customers. 

More Mobile Opportunity

“The satellite TV business’s value to Dish is primarily financial, but to the extent Dish becomes more active in the future in the mobile services business, those TV subs represent potential customers to which Dish could market efficiently,” Supino said.

He added that Dish’s pitch to the Federal Communications Commission for the deal could be that the merger could curb future programming cost inflation by giving the combined company more bargaining power, and a merger would allow satellite TV to survive for a longer period. 

LightShed TMT Partners partner and media and technology analyst Rich Greenfield predicted that Dish and DirecTV would get together this year, part of his January Top 22 TMT Predictions for 2022. While talk of a combination has gone on for years, only to be quashed by regulators, he said believes this is the year for a combination to take place. 

“No, really,” Greenfield wrote. “We believe the regulatory risks today are not high given the state of the Pay TV market. Frankly, if Ergen can’t get it announced this year, it might never happen.” ■

The threat of further direct-to-consumer content consolidation shouldn’t worry traditional pay TV distributors, Altice USA CEO Dexter Goei said at an industry conference Tuesday, because it will help MVPDs weed out what has been an albatross around the industry’s collective neck for years -- unprofitable video customers.  

Analysts expect that other content companies could follow Discovery and WarnerMedia’s attempt to create a streaming video behemoth, but Goei, speaking at the JP Morgan Technology, Media & Communications conference, said that could be an economic boon for traditional distributors. 

With pay TV subscriber rolls steadily eroding over the years, it is evident that consumers are already moving toward an over-the-top, direct-to-consumer model. As content providers look to get larger and gain more streaming scale, Goei said it could allow traditional MVPDs to focus more on highly profitable broadband service, and weed out low-margin video subscribers.

Also Read: Discovery/WarnerMedia Combo Could Have Biggest Initial Impact on Linear Nets 

“Larger players with a full package of offerings on the direct-to-consumer side is good for our business because it focuses our customers on --  instead of 6-7-8 different choices --  on something a lot smaller that in many respects replaces a video consumer that is less and less valuable to us,” Goei said. “And it allows us to focus primarily on our broadband product, allows us to be a partner for content on a direct-to-consumer basis as opposed to a partner on a linear basis and I think will dramatically improve the economic trends of our business from a cash flow standpoint.”

Goei added that the increased focus on DTC offerings could be an advantage for distributors come carriage renewal time, as the equation shifts toward the DTC model. He added that all of Altice USA’s programming partners have some kind of DTC offering.  

“For us, you want a consumer to be a long-term video subscriber that’s a profitable subscriber, [and] you don't want a video subscriber that’s under three years,” Goei said. “Those [under three-year subs] are the ones that are shifting toward the direct-to-consumer offerings and that's good for us. It’s beneficial to our economics. It makes our priorities very clear, in terms of where we focus our capital allocation and our efforts.”

And that means that distributors are going to look hard at DTC offerings when negotiating future carriage deals. 

“We are going to revisit every equation,” Goei said. “... I think we are going to go through, I would call the next two or three years where you will probably see a big transformation in the MVPD world as to how we partner with our content providers. Because it's not sustainable to continue to see price increases every year with viewership falling.”

The Parents Television and Media Council (PTC) said the combination of AT&T and Discovery media assets would create a tsunami of family unfriendly programming, but suggests the deal is likely to be approved.

In response to the announced combo, PTC president Tim Winter said that he anticipates a streaming version of the cable bundle the advocacy group has been trying to unwind for years. 

"The result will have consumers being forced to buy streaming network programming they don’t want in order to get the streaming network programming that they do want, and they will be forced to pay more in the process,” Winter said. “Consumers, meet the new boss, the same as the old boss.”

"We fear that the combination of mostly-family-friendly Discovery with increasingly-toxic HBO will put more children and more families at a greater risk of harm,” he said. PTC was no fan of the Time Warner deal that brought HBO into the AT&T fold.

Winter said another issue is that, according to PTC's recent study, the top streaming services don't have robust parental controls. And while he said it is likely that regulators could force some conditions on the combined company, "if Disney can buy the studio, library, and cable assets of Fox, we suspect approval of this acquisition is mostly perfunctory.”

The Biden Administration has pledged robust antitrust oversight, and Sen. Amy Klobuchar (D-Minn.) has pushed for tougher reviews out of the FTC, which she says under the Trump Administration was working with Band-Aids and duct tape.

There are a lot of reasons why a merger between DirecTV and Dish Network wouldn't make long-term sense — it would cost too much, it would be the combination of two business that are in rapid decline, it’s anti-competitive, it’s just plain dumb — but that doesn't stop people from bringing up the possibility from time to time. And while talk about a possible deal probably will never truly die, Moffett Nathanson principal and senior analyst Craig Moffett said in a research note Tuesday he may have found the final nail in the Dish/DirecTV merger coffin: President Joe Biden’s $2 trillion infrastructure bill.

In a 19-page research note, Moffett pointed out that the infrastructure bill, which includes about $100 billion for broadband expansion into rural areas, could remove one of the barriers to a DirecTV-Dish combination — the fear that it would reduce TV distribution competition in rural markets from two players to one — but creates another. By giving cable, telco and other operators financial incentives to extend broadband into areas that didn’t make economic sense in the past, it also gives consumers the final reason to dump their satellite TV subscription. 

“The Biden infrastructure bill explicitly targets taking the rural core of customers historically served exclusively by satellite providers to zero,” Moffett wrote. 

Also Read: AT&T and TPG: There is No Why

While opening up the rural broadband market would appear to remove one roadblock to a satellite merger — that such a deal would take down the number of competitors in less populated areas from two to one — it poses another challenge in that it could eviscerate satellite TV’s last stronghold. 

“Given the option, for the first time, of choosing not just cable but also OTT alternatives, it’s a safe bet that many customers will simply leave,” Moffett wrote of the satellite TV subscriber base. 

The old arguments for a DirecTV/Dish merger appear compelling on the surface — putting the two together would create a satellite TV juggernaut with 23 million subscribers (more than Comcast!) and would produce cost efficiencies and synergies in the billions of dollars per year. But despite the plusses, those that would push for a merger between the two companies are ignoring the one very big minus — consumers are abandoning traditional pay TV structures for more flexible streaming relationships that ensure that a combination would only prolong the inevitable breakdown of the business. 

Also Read: Dish Gets Back to Its Rural Roots 

And it already is breaking down pretty rapidly without any external help. Moffett estimated that pay TV (cable and satellite) has been losing customers at a 7+% clip over the past four quarters. Gross additions for both DirecTV and Dish have also been plummeting — from a combined 6.45 million subscribers in 2016 to 2.36 million subscribers in 2020. 

In his report, Moffett wrote that the Biden bill would be a “body blow” to the satellite TV business, but especially for Dish, which has made a focus on rural markets its main focus over the years. The same strategy, according to Moffett, has kept DirecTV’s subscriber losses from going totally in the tank.

While Moffett added that the actual size of the rural subscriber pool is unknown, it is obviously large enough to keep these companies going as it becomes an increasingly important part of their respective businesses.

“As the subscriber bases of the two companies spiral lower, the rural core has been steadily growing as a share of what’s left,” Moffett wrote. “Merging the two companies would not change this dynamic at all.”

And now, he continued, “The federal government wants to spend $100B to make this market segment disappear.”  

Dish Network chairman Charlie Ergen has said on several occasions that he believes a DirecTV/Dish merger is “inevitable,” but given that Dish’s future is tied to whether it will be able to successfully build a wireless network, merging with DirecTV shouldn’t be top of mind, according to Moffett.  

Dish has about $16.5 billion in debt ($10.5 billion of which is pledged toward the satellite business) with about $2 billion in maturities due in June. Dish could make that payment with cash on hand, but according to Moffett, that would starve the wireless effort of needed cash to fund its buildout. 

Dish has said that it will spend about $10 billion on its wireless network, a figure that Moffett has said in the past he believes is strikingly low. Adding pressure to that aspect of the business can’t help the situation. 

DirecTV relies on the rural markets as well — Moffett estimates that most of the churn in rural markets is actually between the two satellite companies, so any reduction in that base will adversely affect both companies. In addition, AT&T’s deal to spin off its DirecTV, AT&T TV and U-verse businesses with TPG Capital earlier this year carries a high interest loan (10%) from TPG that also includes a “warrant for 30% of the excess value in the event DirecTV ever realizes an exit at a valuation of greater than $16.2 billion, as it might in the event of a Dish merger,” Moffett wrote. 

Dish and DirecTV tried to merge in 2002,  when both were much stronger companies and the threat of broadband was minuscule, and the government blocked it.  Even as satellite’s fortunes began to wane during a presidential administration that was supposedly open to more deals, the feds reportedly made it pretty clear that they would block a merger, and the current administration appears to be even less inclined to allow a big combination. But ultimately, whether a deal is done will come down to what these things usually come down to — economics. And with the government ready to fund satellite TV’s competitors in its most stable market, those economics don’t look so good. 

Shaw Communications stock began to slip March 18, down nearly 2% in midday trading, as reports began to mount that the Canadian telecom company’s planned $20 billion merger with Rogers Communications could get some regulatory pushback. 

Rogers said March 15 that it had agreed to purchase Shaw in a cash and assumed debt deal worth about $20 billion. The transaction, which valued Shaw shares at C$40.50 ($32.55), was approved by both companies’ boards of directors and was expected to be completed in the first half of 2022. 

Shaw’s stock immediately rose after news broke -- it went as high as $28.05 on March 15, a 46.5% increase from its March 12 close -- but the stock was still far off from Rogers’ offering price. That the stock peaked at $28.17 per share on March 16 (13% below the offering price), and that gap continues to widen -- Shaw stock traded as low as $27.54 per share on March 18 before closing at $27.55, down 1.7% -- has caused some analysts to wonder whether the deal will face some harsh scrutiny. 

Also Read: Altice USA to Buy Morris Broadband for $310 Million

The deal will be reviewed by three Canadian regulatory agencies -- the independent Competition Bureau of Canada, the Canadian Radio-television and Telecommunications Commission, and the Department of Innovation, Science and Economic Development. According to reports throughout the Canadian press, the main issue appears to be the removal of a fourth wireless carrier -- a sticking point with Canadian regulators -- and even Rogers’ promises to keep prices level for Shaw’s Freedom Mobile plan for three years and boost deployment of 5G may not be enough.

Rogers has pledged to invest C$2.5 billion ($2 billion) in 5G networks across Western Canada, creating up to 3,000 new jobs. In addition, Rogers promised to create a  C$1 billion ($800 million) fund dedicated to connecting rural, remote and Indigenous communities to high-speed internet across the four Western provinces and spend another C$3 billion ($2.4 billion) to support additional network, services and technology investments 

While the regulatory agencies have pledged to scrutinize the deal, some Canadian politicians have expressed doubt about the benefits of the merger.

“Big telecom companies are gouging Canadians and continuing to make massive profits in a time where most families are struggling to get by. A merger between two of Canada’s biggest providers will just make it worse,” New Democratic Party leader Jagmeet Singh said in a statement after the deal was announced.  

On the conservative side, MP Pierre Poilievre, the Conservative Shadow Minister for Jobs and Industry, called for hearings into the proposed deal. 

“Some argue the Rogers-Shaw deal means more investment, others that it means less competition,” Poilievre said in a statement. “The only way to know for sure [is] through careful and intense debate. Conservatives want the Industry Committee to hear from customers, workers, business leaders, engineers, economists and other experts to get a complete understanding of the proposed deal.”

Poilievre added that the deal, which would create a C$50 billion telecom powerhouse with C$20 billion in annual revenue, 33,000 employees and about 13 million wireless customers, would be important in any era, but is especially critical during the COVID-19 pandemic, which has forced many Canadians to work from home. 

“If some communities cannot get fast, affordable connections, their people will be left behind.” he continued. “Conversely, fast, affordable wireless combined with remote work could revive struggling rural, remote and indigenous economies like we have not seen since the urbanization phenomenon began. For it to happen, we can no longer accept poor internet at high prices.”   

Canadians pay some of the highest cell phone bills in the world. According to a report by Finnish telecom research company Rewheel, the Big Three Canadian wireless service providers -- Bell, Telus and Rogers -- had the least competitive rates globally. Other reports have compared Canadian wireless rates between 15% and 40% higher than in the U.S. 

It has become such an issue that reducing Canadian wireless bills was a key part of Prime Minister Justin Trudeau's 2019 reelection platform. In March, Trudeau made good on that promise, requiring telecom operators in the country to reduce their charges by 25% over the next two years.

Shares of Shaw Communications rose more than 40% on the Toronto Stock Exchange Monday in the wake of its $20 billion purchase by Rogers Communications, but the stock price was still well below Rogers’ offer as questions persist around the deal’s potential impact on wireless competition in Canada. 

Shaw shares closed at C$33.85 each on the Toronto Exchange March 15, up 41% or C$9.95 each while Rogers stock rose 3.4% (C$2.02 each) to C$61.57 per share. Both stocks are also traded on the New York Stock Exchange, and saw similar gains. Shaw was up 41% ($7.93) to $27.10 per share on the NYSE, while Rogers increased 3.5% ($1.69) to $49.42 each.     

Rogers agreed to purchase Shaw for C$40.50 ($32.40) per share (about $16 billion in total) in cash, a 70% premium to its March 12 close, and the assumption of C$6 billion ($4.8 billion) in debt. The $20 billion deal would create a wireless communications powerhouse with about 13 million customers in Canada.

Both companies also own cable TV operations, but most reports point to possible regulatory concerns on the wireless side of the business. Rogers already is the largest wireless service provider in Canada with about 10.9 million subscribers. Shaw is the fourth largest -- behind BCE and Telus Communications -- with about 2 million wireless customers.  

The Canadian government has been sensitive to competitive issues in the wireless market. Last March Prime Minister Justin Trudeau’s minority Liberal government ordered the three largest wireless service providers to slash prices in their middle range plans by 25% within two years or face regulatory action. 

As part of the Shaw deal, Rogers pledged not to raise prices for Shaw’s mid-range Freedom Mobile plan for three years after the deal closes. It also said it would invest about C$2.5 billion over five years to speed up construction and deployment of 5G networks.   

On a conference call with analysts to discuss the transaction, Rogers CEO Joseph Natale said it was “too early” to determine whether there would be regulatory issues, but that he was confident the deal would win approval.

The transaction will be examined by at least three Canadian government agencies -- the independent Competition Bureau of Canada, the Canadian Radio-television and Telecommunications Commission, and the department of Innovation, Science and Economic Development.

“We have been clear that greater affordability, competition and innovation in Canadian telecommunications are as important to us as a government as they are to Canadians concerned about their cell phone bills,” ISED minister of Innovation, Science and Industry Francois-Philippe Champagne said in a statement.  “These goals will be front and centre in analyzing the implications of today’s news. This transaction will be reviewed by the independent Competition Bureau of Canada, the CRTC, as well as ISED and we won’t presuppose the outcomes of these processes.”

In a blog post, Morningstar Research wrote that while there may be reasons regulators would want to nix the deal, it didn't see a strong reason to block it. 

“Most importantly, the companies are not major competitors -- 80% of Shaw’s revenue and 90% of its EBITDA come from its wireline business, which has essentially no overlap with that of Rogers,” Morningstar wrote. “In wireless, we estimate Shaw has only 4%-5% national market share, leaving it a minor player based on that metric.”

But the deal would remove the fourth largest player from the Canadian wireless market, which could cause some regulators concerns. 

“Regulatory actions and rules of spectrum auctions indicate regulators prefer four national wireless competitors, and Shaw has made major strides in recent years to position itself as the fourth,” Morningstar wrote. “Although Shaw’s wireless business remains relatively tiny, it has shaken up the industry. Most notably, we think it is responsible for moving each of the major companies to offer unlimited data plans and keep pricing down with its consumer-friendly and innovative deals.” 

That dilemma could be solved in any number of ways, including requiring the company to divest of some assets, similar to what the Competition Bureau required BCE to do when it bought Manitoba Telecom Services in 2017. 

Rogers Communications said it has agreed to merge with telecom rival Shaw Communications in a $20 billion deal that will bring together the two largest cable operators in the country and create a Canadian wireless powerhouse. The deal, which was unanimously approved by the boards of directors of both companies, is expected to close in the first half of 2022, pending regulatory approvals. 

Rogers and Shaw have been mostly friendly competitors over the years, swapping assets occasionally as Rogers concentrated on Ontario and Shaw focused on the Western provinces. Both companies are relatively similar as wireline service providers, as Shaw has about 5.2 million wireline revenue generating units (RGUs) and Rogers about 5.1 million. Their main difference has been on the wireless front. Rogers is the largest Canadian wireless company with 10.9 million customers, while Shaw is No. 4 with 2 million customers.

According to the transaction, Rogers will pay Shaw shareholders about C$40.50 ($32.40) per share in cash, a 70% premium to its Friday close, and assume about C$6 billion ($4.8 billion) in Shaw debt. The Shaw family will receive 23.6 million shares of Rogers stock in the transaction, making them one of the largest shareholders of the combined company.    

In a press release, both companies pointed to the wireless opportunities the merger would bring, mainly allowing Rogers, already with the largest 5G network in Canada, to expand that technology throughout the country. Once the transaction is complete, the new Rogers plans to invest C$2.5 billion ($2 billion) in 5G networks across Western Canada, creating up to 3,000 new jobs. In addition, Rogers pledged to create a  C$1 billion ($800 million) fund dedicated to connecting rural, remote and Indigenous communities to high-speed Internet across the four Western provinces and spend another C$3 billion ($2.4 billion) to support additional network, services and technology investments    

“Western Canada is a major driver of our national economy and together we will have the scale, expertise and commitment to deliver the technology infrastructure needed to keep local communities connected, businesses competitive and attract new investment,” Rogers CEO Joe Natale said. “We’re at a critical inflection point where generational investments are needed to make Canada-wide 5G a reality. 5G is about nation-building; it’s vital to boosting productivity and will help close the connectivity gap faster in rural, remote and Indigenous communities.” 

Rogers has been on the lookout to grow through acquisition for months. In September it teamed up with U.S. cable company Altice USA in a $7.8 billion bid to purchase Cogeco Communications: Altice would have assumed Cogeco’s U.S. cable operations. That bid was rejected by Cogeco’s controlling shareholder, the Audet family. 

“Today’s announcement brings two iconic Canadian family-founded businesses together with the expertise, combined assets, and scale to deliver the next generation of telecommunications to Canadian consumers and businesses. This is a transformational combination; and extends our company’s long legacy of innovation, entrepreneurship, and dedication to world-class service for decades to come,” Rogers Communications chairman Edward Rogers said in a press release.  

While Shaw has managed to hold its own -- it added 101,000 wireless customers in its fiscal first quarter ended Nov. 30 --  in April, the company laid off about 1,000 workers, mostly in its retail and sales operations. Its founder, executive chairman and former CEO JR Shaw died in March 2020. 

“Our two companies have been successful because of the foresight and vision of two great founders who were driven by their unrelenting pioneering spirit and entrepreneurial values,” Shaw Communications executive chairman and CEO Brad Shaw said in a press release. “Without a doubt, my father would be proud of this moment, combining forces with the company founded by his old friend to deliver more Canadians world class connectivity, more choice, and better value. While unlocking tremendous shareholder value, combining these two great companies also creates a truly national provider with the capacity to invest greater resources expeditiously to build the wireline and wireless networks that all Canadians need for the long term. This transaction will create benefits for generations to come.”

The cable industry’s two major technical bodies have officially agreed to merge.

The Society of Cable Telecommunications Engineers (SCTE) and its global arm, the International Society of Broadband Experts (ISBE), will now become subsidiaries of CableLabs, effective Jan. 1. 

According to the groups’ joint announcement, both boards voted unanimously for the move, and the SCTE membership gave its “overwhelming support. 

Also read: SCTE and CableLabs Set to Merge

“The pace of innovation requires that the work—which begins with research and development of published specifications, industry standards and products deployed to market—is efficiently integrated and broadly made available. This assures that innovation, specifications, standards, training and deployment are more efficiently connected,” said Phil McKinney, president and CEO of CableLabs. “This move represents the industry’s ongoing commitment to 10G, rapidly delivering new innovations and services that meet ever-evolving consumer needs and support of the future expansion of broadband deployment.”

CableLabs, established in 1988, is a research and development consortium backed by the big, consolidated operator giants of the U.S. and Canadian cable industries. Its members had earlier voted unanimously to pursue the tie-up.

“The increased alignment that will come out of this relationship is critical,” said Mark Dzuban, president and CEO of SCTE•ISBE. “Streamlining vendor and international relationships creates efficiencies in connecting implementation, best practices, needs and allocation of resources across the industry. We’re proud to join the CableLabs family.”

The Justice Department and broadband/telecom company CenturyLink have settled allegations that the company violated the conditions of its acquisition of Level 3. 

Specifically, DOJ said CenturyLink had promised not to solicit customers that had switched to assets divested as part of the deal. DOJ said that on more than 70 occasions CenturyLink tried to woo back customers who had chosen to switch to the divestiture buyer in Boise City-Nampa, Idaho. 

Related: CenturyLink Extends Connectivity Pledge 

"When a defendant violates the terms of a settlement decree, it must be held accountable to its obligations to the department and the American consumer,” said Assistant Attorney General Makan Delrahim, who heads the antitrust division. “Today’s motion to amend the Final Judgment ensures that consumers get the benefit of competition otherwise lost by CenturyLink’s acquisition of Level 3 Communications. I also commend CenturyLink for its cooperation in resolving the department’s concerns.” 

CenturyLink did not dispute the allegations and agreed to: 

1. "extend the non-solicitation period by two years for the Boise MSA; 

2. "the appointment of an independent monitoring trustee; and

3. "pay the United States to defray the costs of the department’s investigation of CenturyLink’s violations of the court order."

DOJ has submitted that amended settlement to the U.S. District Court for the District of Columbia, which will have to sign off on the settlement for it to become official. 

CenturyLink also agreed to abide by four new provisions in antitrust settlements that make them easier for the Antitrust Division to enforce.

House Antitrust Subcommittee chairman David Cicilline (D-R.I.) is leading a push by some Hill Democrats to include a moratorium on all but distress sale mergers during the pandemic.

They want to add a provision to the next COVID-19 aid bill that prevents any corporate mergers that "do not involve the purchase of a severely distressed company."

They argue that "powerful corporations and private equity firms" are ready to unfairly exploit the crisis for their own financial gain unless Congress steps in to insure that companies use cash reserves to help employees, not "acquire more power," as backer Alexandria Ocasio-Cortez (D-N.Y.) said in a statement.

Cicilline, Ocasio-Cortez and others wrote to House Speaker Nancy Pelosi (D-Calif.) and Minority Leader Kevin McCarthy (R-Calif.), citing mergers during the great recession.

"Mega-mergers and corporate takeovers permitted by enforcers during the last economic crisis led, in several major instances, to the firing of millions of workers, slowing of investment in innovation, and huge increases in executive bonuses," they said. "Amid the current crisis—with millions of Americans facing unemployment and millions of businesses facing potential extinction—the antitrust agencies are once again swiftly approving corporate deal-making. If Congress does not act, predatory mergers and takeovers will enable a small number of investors and executives to further concentrate wealth and control at the expense of workers and independent business."

Fox said that it completed its purchase of ad supported streaming video company Tubi.

In March, Fox agreed to purchase Tubi for $440 million. 

The deal is one of several in which media companies bought streaming services, which have been seeing a huge increase in usage with viewers at home because of the COVID-19 pandemic.

The rush was started by Viacom, which bought Pluto TV last year. Since then, Comcast agreed to acquire Xumo in February and, just today, Comcast also agreed to buy Vudu from WalMart.

Tubi is available on about 25 digital platforms in the U.S. and features 20,000 titles and 56,00 hours of film and television episodes.

At the time Tubi announced its agreement to sell, it said Fox’s relationships with advertisers and distributors would help Tubi continue to grow. 

Sprint and T-Mobile, nearing the finish line in their $26 billion merger, have agreed to give T-Mobile parent Deutsche Telekom a larger stake in the combined company.

T-Mobile-Sprint amended their business combination agreement Thursday, with Sprint parent Softbank Group agreeing to free up about 48.8 million shares of Sprint stock to the combined company, New T-Mobile, after the deal is closed. The agreement will have no effect on other shareholders of both companies -- they will still exchange 9.75 Sprint shares for every T-Mobile share.

Softbank, which controls about 80% of Sprint stock, will now exchange 11.3 Sprint shares for every T-Mobile share. Once the deal is closed, expected on April 1, Softbank will own 24% of the newly combined company, with Deutsche Telekom owning 43%. The remaining 33% of the company will be held by public shareholders.

The completion of the merger will end what has been a two-year ordeal for both companies. Earlier this month a federal court cleared the path for the deal, thwarting attempts by several states attorneys general to block the deal. Later, New York State Attorney General Letitia James, one of the staunchest opponents of the deal, said she would not appeal the federal ruling.  However, the deal still can’t close unless California Attorney General Xavier Becerra agrees not to appeal.

According to several reports, Sprint decided to give Deutsche Telekom a larger stake to make up for deteriorating financials at the company as the approval process has dragged on. 

Viacom and CBS said they have set Dec. 4, after the market closes, as the date for the completion of their long-awaited merger.

The two companies, which announced their plans to combine in August, said they expect trading of their new stock -- under the new symbol VIAC -- will begin on Dec. 5. The combined company will be called ViacomCBS and will include assets like cable channels MTV, Comedy Central, BET and Nickelodeon, broadcast network CBS, premium channel Showtime, production unit Paramount studios and others. 

CBS and Viacom said Monday that they are moving closer toward the finish line for their proposed merger, adding that the deal should close in early December.

CBS and Viacom first announced the deal in August. The new entity -- ViacomCBS -- would generate an estimated $28 billion in annual revenue via film production, broadcasting and cable programming and be headed by Viacom CEO Bob Bakish. 

In a press release Monday, Viacom and CBS said their respective largest shareholder -- National Amusements Inc., -- has approved the deal, which they said satisfies the closing conditions to the merger requiring approval of a majority of CBS Class A shares and a majority of Viacom Class A shares.

The companies said the merger remains subject to other customary closing conditions and once the deal closes it will be listed on the NASDAQ Stock Market under the ticker symbols “VIACA” and “VIAC.” 

Less than a year after first announcing the deal, Nexstar Media Group said it has completed its $7.2 billion purchase of Tribune Media, creating the largest TV station group in the country, with 197 owned and operated properties in 115 markets covering 39% of U.S. television homes.

Nexstar and Tribune first announced the merger in December 2018. Also as part of the transaction, Nexstar gets Tribune’s 31% stake in the Food Network and its full ownership of WGN America.

The closing comes days after the merger received approval from the Federal Communications Commission. 

“The completion of our accretive acquisition of Tribune Media increases Nexstar’s geographic diversity and audience reach with national coverage and an expanded presence in top 50 DMAs, while offering complementary media assets and investments, scale driven synergies and further cash flow diversification,” Nexstar CEO Perry Sook said in a press release. “Nexstar Media Group is now the nation’s leading creator and distributor of local news, entertainment, sports, lifestyle and network programming through its broadcast and digital media platforms.”

Nexstar also announced that it will take three top Tribune executives into the fold, effective immediately: Sean Compton has been named EVP of WGN America, WGN Radio and director of content acquisition; Dana Zimmer was tapped as EVP and chief distribution and strategy officer and Gary Weitman has been named EVP and chief communications officer.

“Today, the Nexstar team is comprised of more than 13,000 talented team members across America united by a common vision focused on localism, innovation and growth as well as a passion for professional excellence,” Sook said in the press release. “Sean, Dana and Gary are recognized leaders in their respective fields and we welcome them to the Nexstar senior management team.

BofA Merrill Lynch acted as financial adviser and Kirkland & Ellis LLP and Wiley Rein LLP acted as legal counsel to Nexstar in connection with the transaction. Moelis & Company and Guggenheim Securities acted as financial advisors to Tribune Media and Debevoise & Plimpton LLP and Covington & Burling LLP acted as its legal counsel. 

As part of the deal, Nexstar spun 11 stations off to Tegna, which also announced Thursday it had closed on that purchase.

The $740 million deal ups Tegna's portfolio to 62 TV stations in 51 markets.

A little more than a week after an activist shareholder made waves by recommending that AT&T sell off its DirecTV unit, the telco is reportedly looking into ways that it could separate from the satellite TV company it bought just four years ago.

According to a report in the Wall Street Journal, AT&T is “exploring” ways to divest of DirecTV, citing unnamed sources familiar with the company. AT&T bought DirecTV in 2015 for $48.5 billion, a purchase that kicked off the telco’s diversification into the media business. At the time, DirecTV was the No. 1 pay TV distributor in the country with more than 20 million customers. Today, as streaming TV and over-the-top players have eroded the traditional base, DirecTV has slipped to the No. 2 spot -- behind Comcast -- and has shed more than 2 million customers in the past two years.

AT&T declined to comment.

According to the Journal, some of the options AT&T is considering is a spinoff of the satellite giant, a sale to Dish Network, or simply keeping it.

Just who would buy the satellite behemoth is the big question. Rival satellite player Dish Network has long been thought to be the logical suitor -- the two attempted a merger in 2001, but the deal was rejected by federal regulators. While the current federal administration appears to be more open to mega-mergers, the two sides have stated publicly that winning regulatory approval of a deal would be a long shot.

“That's been tried from a regulatory perspective,” AT&T chief financial officer John Stephens said at the Bank of America Merrill Lynch Media, Communications & Entertainment conference last week concerning the possibility of a DirecTV/Dish merger. “It hasn't been successful and I don't know that there's any change in that regulatory perspective. So understanding industrial logic, put quite frankly, it's been tried and has been rejected.”

Regarding the Washington, D.C. regulatory climate, Stephens pointed to the hurdles that are facing another big telecom merger -- T-Mobile’s $26 billion purchase of Sprint. That deal was approved by regulators but is facing blowback from several state Attorneys General that are trying to block the transaction.

“...We'd rather focus on the business than focus on regulatory process and approvals,” Stephens said.

AT&T has been under pressure since hedge fund Elliott Management issued a letter to its board on Sept. 9 criticizing current management and calling for the sale of DirecTV.  Elliott, which owns a $3.2 billion stake in AT&T (less than 3% of its total outstanding shares), said the company’s media strategy is a mistake, also tossing cold water on its other mega deal in the space -- last year’s $108.7 billion purchase of Time Warner Inc.

At the Goldman Sachs Communacopia conference Tuesday, AT&T chairman and CEO Randall Stephenson, the architect of that media strategy, said that Elliott has some good and not so good ideas.

“Look, from our view, it's a mixed bag," Stephenson said. “There are some things in the letter that we look at and see and makes a lot of sense, and we need to push further and then talk about it. There are some other areas, you look at it. And as you would guess, it's not quite as clear in terms of how it would make sense for us.”

One idea that Stephenson said makes sense is reducing overall leverage, something the company already is doing. He added that he is willing to talk to Elliott at some point to discuss their concerns.

“But I mean, look, these are smart guys, right? And these are smart guys, and they put a lot of ideas into the paper that we need to sit down, engage with them on,” Stephenson said at the Goldman Sachs conference. “And at the end of the day, we are going to evaluate it and talk to them and see what makes sense for all of our shareholders. So that's kind of where we are.”

AT&T shares were up about 1% in after-hours trading Wednesday.

T-Mobile USA released its second quarter financial results at around 4 p.m. on Thursday as promised, but failed to hold a planned conference call with analysts that many hoped would include the announcement of its pending $26.5 billion merger with No. 4 wireless carrier Sprint. Instead, investors will have to wait, as reports said the U.S. Dept. of Justice was talking with several state attorneys general to sign off on a deal that would join the two wireless giants. 

Sprint and T-Mobile were said to be close to obtaining that approval, as reports said earlier Thursday that the companies and government regulators agreed on a plan that would make Dish Network a fourth national wireless competitor.  According to those reports, Dish would pay $1.4 billion to buy Sprint’s Boost Mobile prepaid wireless business and shell out another $3.6 billion three years later to buy a swath of 800 Megahertz wireless spectrum.

The news sent Dish stock into a tailspin early Thursday -- it dipped as much as 6.2% earlier in the day before closing at $39.17 per share, down 5.8%, or $2.39 each. Sprint shares closed down almost 3% to $7.44 each, while T-Mobile stock was down about 1% to $79.91 each. 

In June, attorneys general from nine states and the District of Columbia filed a lawsuit to block the Sprint-T-Mobile merger, claiming it would result in higher prices for cellular phone service. 

According to a report in the Wall Street Journal, the Dept. of Justice was meeting with several of those AGs to gain their support for the merger.

T-Mobile said earlier Thursday it would push up the release of Q2 earnings from 9 a.m to 4:01 p.m., and hold a conference call at 4:30. That helped fuel some speculation that a Sprint deal would be announced. But that didn’t come. T-Mobile didn’t say when it would reschedule the conference call, but some reports said they expect the Justice Dept. to announce its approval of the deal by Friday.

[embed]https://twitter.com/CGasparino/status/1154468795466960896[/embed]

T-Mobile reported 1.8 million net subscriber additions in the second quarter, up 11% from the prior year, while total revenue rose 4% to $11 billion and net income rose 20% to $939 million, or $1.09 per share. Cash flow rose 7% in the period to $3.5 billion, the company said. 

Sprint stock plunged more than 7% on Tuesday after a group of states Attorneys General filed a federal suit to block the wireless company’s pending merger with T-Mobile US, arguing that the $26 billion deal would drive up cellular service prices.

Sprint stock fell as much as 7.3% on Tuesday to $6.48 per share as news of the suit, filed in U.S. District Court for the Southern District of New York, came out. The suit was led by New York Attorney General Letitia James and California Attorney General Xavier Becerra, who were joined by AGs from Colorado, the District of Columbia, Maryland, Michigan, Mississippi, Connecticut, Virginia and Wisconsin.

Sprint stock closed at $6.58 each on June 11, down 5.9%, or 41 cents per share. T-Mobile shares closed at $75.46, down 1.6%, or $1.21 each.

“When it comes to corporate power, bigger isn’t always better,” said New York AG James said in a press release. “The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country. That’s why we are going to court to stop this merger and protect our consumers, because this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.”

The merger would join the third and fourth largest wireless companies in the country, eliminating at least one major competitor, which in the past has been a hard regulatory hurdle to clear. But the companies were encouraged after Federal Communications Commission chairman Ajit Pai announced his support of the deal after the two parties proposed divesting its Boost Mobile pre-paid wireless subsidiary and pledging to build out 5G service to most of the country. 

“Although T-Mobile and Sprint may be promising faster, better, and cheaper service with this merger, the evidence weighs against it,” California AG Becerra said in the press release. “This merger would hurt the most vulnerable Californians and result in a compressed market with fewer choices and higher prices. Today, along with New York and eight other partner states, we’ve filed a lawsuit to block this merger and protect the residents of our state.”

Sprint and T-Mobile have been down this road before. The two scrapped plans for a merger in 2014 after it became clear that it would not receive approval from Obama administration officials. The two tried it again in November 2017, but balked after they couldn’t agree on control issues. But by May of 2018, both were back at the negotiating table.

Opposition to the deal seems to be split across party lines. The Attorneys General that are part of the most recent suit are all Democrats. Earlier Tuesday, Fox Business Network correspondent Charlie Gasparino reported that T-Mobile CEO John Legere met Monday with federal officials and that “it looks like this thing is moving forward in terms of potentially approving.”

According to a report in the Wall Street Journal, Sprint and T-Mobile can still go through with the merger despite the states’ objections as long as they win federal approval, but there would be a cloud of legal uncertainty over the deal’s future. 

CBS and Viacom shares soared in early trading Thursday after CNBC said the two companies will restart merger talks in mid-June.

Citing unnamed sources familiar with the deal, CNBC reporter David Faber said the boards of both companies are preparing for deal talks.He added that current Viacom CEO Bob Bakish would likely become CEO of the combined company.

CBS stock rose as high as $48.97 per share (up 4.8% or $2.25 each) on Thursday, while Viacom stock was up as much as 5.6% to $29.30 each in early trading. CBS shares were priced at $48.70 each (up 4.25%) at 10:02 a.m. on May 30, while Viacom was priced at $29.12 each, up 4.9%.

This would be the third time that both companies have explored a recombination after their split in 2006. Both companies explored the possibility of recombining in 2016 and again in 2018, only to scrap those plans after they couldn’t agree on a proper valuation. But since then CBS has undergone some management turmoil -- chairman and CEO Les Moonves was ousted last year amid a sexual harassment scandal -- and the idea of getting the band back together became more attractive, as increasing scale in the new era of direct-to-conumer distribution and OTT competition has become paramount for most media comapnies.

Faber added that a combined CBS-Viacom likely wouldn’t be finished on the deal front just yet. CBS has had its eye on premium channel Starz, reportedly offering $5 billion for the network earlier this year. 

In a research note, Wolfe Research managing director Marci Ryvicker said the CBS-Viacom combination is compelling.

“This is the first time we’re truly excited by the thought of a CBS-[Viacom] combo (Direct To Consumer, cost savings, international exposure, etc.) and view the risk-reward proposition as compelling for BOTH stocks,” Ryvicker wrote.

Nexstar Media Group estimates it will reap at least $75 million in additional retransmission consent fees after its $6.4 billion purchase of Tribune Media closes next year, meaning cable, satellite and telco TV operators will have to dig deeper into the well.

Nexstar agreed to purchase Tribune Media for $46.50 per share in cash in a deal valued at $6.4 billion including assumed debt. Nexstar said it hopes to obtain the necessary regulatory approvals and close the deal sometime in the third quarter of 2019.

Tribune’s 42 local TV stations in 39 markets will vault Nexstar into the No 1 spot among broadcast station groups with 216 stations in 118 markets. The combined Nexstar-Tribune would still fall below the federal TV station ownership cap of 39% of the total TV market, although the company does expect to divest some stations.

On a conference call with analysts to discuss the deal, Nexstar said it expects retrans revenue to rise by about $75 million in the combined company just by applying Nexstar’s rates to the Tribune stations. That figure doesn’t include increased renewal revenue as deals expire.

On the call Nexstar chairman and CEO Perry Sook said that Nexstar’s enthusiasm for retrans growth hasn’t waned with this deal. “At this point, we would slightly bet the over.”

The deal would come about one year after Nexstar purchased Media General, increasing its ownership to 174 TV stations across the country. On the call, Nexstar chief financial officer Thomas Carter said that about 10% of its former Media General stations were up for retrans renewals this year, with 5% of those deals already completed and the remainder due this month. About 70% of Nexstar’s retrans deals come up in 2019, with 15% of those up in the middle of the year and the remainder in the back half.

Sook said that in the past, acquired stations moved to the Nexstar rate card within 30 days of those deals closing. He anticipated the same time frame for the Tribune stations.

“It will be fairly quickly following the acquisition,” Sook said.

What will happen to Tribune Media’s cable channel WGN America is still up in the air. Sook said that he was impressed with the turnaround at the channel: cash flow has gone from a negative showing in 2017 to a “nine-digit” positive this year. But he said some outside parties have expressed interest in buying the channel, and if the right deal came along, Nexstar would sell the network.

“I would say we’re happy with the progress they have made,” Sook said on the call. “If someone is willing to pay a significant premium, we’re also happy to have that discussion as well. Currently we have no plans to immediately divest of it.”

Nexstar had looked at the Tribune assets in 2017, but backed off when the price became too rich for its tastes. Sinclair Broadcast Group had initially agreed to buy Tribune in May 2017 for $3.9 billion, but Tribune terminated that deal in August after what it said was Sinclair’s sluggishness through the regulatory approval process. 

TV station consolidation is expected to continue in earnest over the net few years, in the wake of 21st Century Fox’s asset sale to Disney, as “New Fox” has said it would eye purchasing more stations, and Cox Enterprises said in July it was considering placing about 14 properties on the block.

Sook said Nexstar would focus on completing its current deal and integrating the Tribune stations, but added that if the federal ownership cap either rises or is eliminated, it would consider bulking up even more.

“We want to de-lever a bit and digest this before we would taking another step, but if the rules were to change and there was an opportunity as accretive as this, we’d obviously be very interested,” Sook said, adding that the deal also opens up the opportunity of swapping stations with other broadcasters to beef up its presence in some markets. “There are a lot of levers to pull post-completion, but completing the acquisition is going to be Job 1 for us in the immediate future."

In a huge merger among telecom industry vendors, CommScope has agreed to purchase Arris in an all-cash deal with a total purchase price of $7.4 billion, $31.75 a share.

After a widely reported series of talks, the deal was announced by CommScope this morning. Both companies have market capitalizations in the area of $5 billion.

Notably, the $7.4 billion figure, CommScore said, factors in debt financing for the purchase. The Wall Street Journal pegs the base value of the transaction, minus interest, at $4.93 billion. 

Following closure of the deal, Eddie Edwards will continue in his role as president and CEO of Hickory, N.C.-based CommScope. Arris CEO Bruce McClellan and other key Arris managers will be joining the combined company. CommScope said it will “maintain a significant presence” within Arris’ Suwanee, Georgia headquarters.

The Carlyle Group has reestablished an ownership position in CommScope through a $1 billion minority equity investment as part of CommScope’s financing of the transaction.

Related: Arris Close to $5.6B Purchase by CommScope: Report

“After a comprehensive evaluation of our business and the evolving industry we operate in, we are confident that combining with Arris is the best path forward for CommScope to grow and provide the greatest returns for shareholders,” said Edwards, in a statement. “CommScope and Arris will bring together a unique set of complementary assets and capabilities that enable end-to-end wired and wireless communications infrastructure solutions that neither company could otherwise achieve on its own. With Arris, we will access new and growing markets, and have greater technology, solutions and employee talent that will provide additional value and benefit to our customers and partners.”

Added McClelland said, “CommScope is an ideal partner for Arris. In addition to providing immediate and substantial cash value to our shareholders, we are excited for what this combination will deliver for our customers, partners and employees around the world. Today’s agreement is a testament to the strength of Arris: our leading technology, talented employees and established competitive position. With CommScope, we expect to further advance Arris’ strategy to drive innovation across our iconic brands and pioneer the standards and pathways for tomorrow’s personalized, connected always-on consumer experience. Arris will become part of an even stronger, more global industry leader, and I look forward to working with the CommScope team to achieve great results for the combined company.”

Arris paid $800 million to acquire Ruckus Wireless last year and had been diversifying its product line to match the wireless convergence of its cable operator client base. But after its $2.1 billion purchase of Pace in 2016, it remained heavily ensconced in the fading pay TV set-top box business, with 35% of its revenue coming from that sector.

CommScope, meanwhile, not only offers an escape for Arris, but a synergistic partner, with the two tech vendors selling complimentary products in emerging areas like CBRS.

BTIG Research analyst Walter Piecyk said the combined companies could realize $300-$450 million in annual cost synergies.

“Wireless operators are densifying and entering the broadband market and cable operators are likely to build wireless networks,” Piecyk wrote in a note to investors last week. “CommScope and Arris have complementary products that address these diverse sets of service providers. As an example, Arris has developed CBRS access points that will appeal to wireless and cable operators and CommScope is developing a SAS (Spectrum Access System) that enables the functionality of those access points.”

CommScope and Arris combined control approximately 15,000 patents and about $800 million in average annual research and development investments. Their combined company is expected to serve customers across more than 150 countries.

For the 12 months ended September 30, on a pro forma basis, the combined company would have generated revenues of approximately $11.3 billion with adjusted EBITDA of approximately $1.8 billion.

Arris is on the cusp of a $5.6 billion deal that would see the leading cable industry vendor sold to wireless tech company CommScope, CNBC reports.

Citing unnamed sources, the news services said a deal could be announced as soon as Wednesday. Last week, it was Reuters that reported that the two companies were in talks. Reps for both Arris or CommScope have yet to respond to MCN’s inquiries for comment.

Arris stock was up about 12% at mid-day while CommScope was down about 2%. 

With a market capitalization of just over $5 billion, Arris is involved in cable wireline broadband and has made moves to follow the cable industry’s migration into wireless, acquiring Ruckus Networks last year for $800 million.

But Suwannee, Georgia-based Arris remains heavily entrenched in the fading pay TV set-top business following its 2016 acquisition of Pace for $2.1 billion. In fact, set-tops still account for 35% of its business.

Market capped at $4.689 billion, CommScope produces complimentary products in emerging sectors like CBRS and would provide Arris with an exit strategy.

Related: Report: CommScope Talking Buyout With Arris

“Wireless operators are densifying and entering the broadband market and cable operators are likely to build wireless networks,” said BTIG Research analyst Walt Piecyk in a note to investors last week. “CommScope and Arris have complementary products that address these diverse sets of service providers. As an example, Arris has developed CBRS access points that will appeal to wireless and cable operators and CommScope is developing a SAS (Spectrum Access System) that enables the functionality of those access points.”

Piecyk said the combined companies could realize $300-$450 million in annual cost synergies.

“A combination of the two companies could broaden the target market in to regions where each company derives only a small percentage of revenue today,” he added. “CommScope generates 15% ($730 million annualized) of its revenue in APAC vs only 5% ($370 million annualized) at Arris, while in the Americas outside of the US, Arris generates 19% ($1.3 billion annualized) of revenue vs 7% ($355 million annualized) at CommScope.

Add Altice USA to the growing list of communications companies coming out against the proposed T-Mobile-Sprint merger, claiming in its petition filed with the Federal Communications Commission Tuesday that the deal could makes its ongoing wireless agreement with Sprint difficult.

Dish Network filed a similar petition against the merger with the FCC on Monday.

Altice USA signed a Mobile Virtual Network Operator agreement with Sprint in 2017 to provide wireless services to its customers in the New York area and the Midwest.  Altice expects to launch the wireless service early next year.

But in its petition with the FCC, Altice USA said a Sprint merger with T-Mobile could have an adverse effect on its own wireless deal with Sprint.

Related: Former Altice Exec Resurfaces at Sprint 

In its FCC filing, Altice sad it was confident in its ability to offer its wireless service in 2019, a product it said had strategic importance for both companies.

But the operator said it “has concerns about the opportunity to expand its wireless service nationwide and over the long term, because T-Mobile and the New T-Mobile have made no tangible commitments regarding meaningful support for current MVNO partners, including offering such partners the full nationwide network that the New T-Mobile will enjoy. The concerns of Altice are magnified in view of T-Mobile’s hostile statements against MVNOs, including cable operators entering the wireless market.”

Related: Altice USA Hires Jean Charles Nicolas to Lead Mobile Unit 

While Altice said its Sprint MVNO will continue after Sprint is acquired, there are no guarantees that T-Mobile will support the MVNO market once the merger is complete, especially its commitment to supporting further expansion in the wireless arena. That commitment is critical to the survival of any MVNO service, Altice USA said in the filing.

“Altice’s agreement with Sprint clearly accounts for the continuation of the relationship if Sprint is acquired,” Altice USA said in the filing. “However, given the lack of firm commitments by [T-Mobile] to support the MVNO market if the merger is consummated, Altice is concerned about [T-Mobile’s] willingness to support Altice’s further expansion in the wireless market.

“ ...it clearly is not lost on Applicants that MVNOs such as Tracfone, Altice, Charter, and Comcast need nationwide, long-term, wholesale arrangements in order to provide nationwide wireless service and, without these arrangements, MVNOs cannot compete,” Altice USA continued. “However, without actual commitments from the New T-Mobile to provide its MVNO partners with durable, long-term, nationwide wholesale terms, the competitive impact of these MVNO partners will not exist and cannot be considered by the Commission.”

Altice USA fears that instead of supporting its MVNO deals, the New T-Mobile will be incentivized to “expand its own market power y refusing to offer reasonable, nationwide, wholesale wireless terms to its MVNO partners. T-Mobile’s own comments to date, and its refusals to make commitments to the MVNO market, already have telegraphed this result.”

To remedy that situation, Altice USA proposed that as a condition to approval the New T-Mobile must agree to honor and implement existing MVNO agreements. Other conditions proposed by the cable operator inclide: agreeing to offer MVNO partners for the full term of their existing agreement or 10 years (whichever is later) the best wholesale terms and conditions; divesting spectrum that exceeds the spectrum screen, and associated network infrastructure, in order to make those assets available to MVNOs, and smaller wireless players that need spectrum; and filing detailed quarterly reports with the Commission describing New T-Mobile’s status in implementing the conditions for 10 years after the deal is complete. 

Tribune Media snuffed out its merger deal with Sinclair Broadcasting, terminating the deal Thursday and simultaneously filing suit in Delaware Chancery Court claiming Sinclair breached its contract.

Tribune is seeking $1 billion in damages, according to the suit.

The termination ends what has been a year-long journey for both companies. Sinclair announced the $3.9 billion deal in May 2017. The combination would have made Sinclair, already the largest TV station group in the country even more powerful, with more than 200 stations and covering over 70% of the country. But it was that bulk that ultimately did the deal in. 

The Federal Communications Commission was in the process of scheduling hearings into a Sinclair proposal to divest three stations to entities it would ultimately control, which the agency called possible sham transactions. Sinclair later said it would place two of those stations in a trust for later sale to third parties, and decided to keep the other – WGN in Chicago – as part of the deal.

Related: FCC: Sinclair-Tribune Deal as Proposed is Not in Public Interest

Tribune’s decision to scrap the merger comes as a bit of a surprise. Yesterday, in its Q2 earnings conference call, Sinclair said it was continuing talks with Tribune to work out a deal. The deadline to close the transaction was Aug. 8, but it appeared that the two could extend that date to work out an agreement.

That apparently wasn’t in the cards.

In a statement, Tribune said although Sinclair had pledged to use its “reasonable best efforts to obtain regulatory approval as promptly as possible,” instead it engaged in an “unnecessary and aggressive” battle with regulators over station divestitures, refused to sell stations in certain markets and created aggressive divestiture structures and third-party sales that either were rejected or posed a high risk of rejection by regulators.

“In light of the FCC’s unanimous decision, referring the issue of Sinclair’s conduct for a hearing before an administrative law judge, our merger cannot be completed within an acceptable timeframe, if ever,” Tribune Media CEO Peter Kern said in a statement. “This uncertainty and delay would be detrimental to our company and our shareholders. Accordingly, we have exercised our right to terminate the Merger Agreement, and, by way of our lawsuit, intend to hold Sinclair accountable.”

Sinclair officials did not return requests for comment.

The termination could mean that Tribune is back in play, and several other station groups have been aggressively adding properties through deals in recent months, including Gray TV, and Nexstar Broadcasting Group. 

“This morning’s course of action should not be a surprise to investors who have been following the saga, but clearly the prospect of Tribune agreeing to see the administrative hearing process through (presumably in exchange for some form of ‘sweetener’ from Sinclair) is off the table and Tribune begins the next chapter of its history as a standalone entity (for how long, remains unclear),” said Evercore ISI broadcast analyst David Joyce in a note to clients.

In a statement, Free Press CEO Craig Aaron said the termination was good for consumers.

“The collapse of the merger is great news for dozens of local communities that will be spared Sinclair’s slanted coverage and ridiculous must-runs," Aaron said in a statement. "For years, Sinclair has been a dishonest broker at the FCC, using fuzzy math and sketchy shell companies to evade the agency’s rules and expand its empire. Its history of deceit and arrogant approach to the agency finally caught up with Sinclair. The broadcast giant's double-dealing became too much for Tribune executives to bear. As details of Sinclair’s deceptions emerge — and with other investigations underway a the Department of Justice — it’s reasonable to question whether the broadcaster deserves to hold any licenses to profit off the public airwaves.

“Hopefully, FCC opposition to this deal is the start of a trend in favor of more independent voices and local choices for news," Aaron continued. "The FCC majority’s recent gutting of media ownership limits suggests otherwise. The demise of this deal presents an opportunity to embark on a new path, an opportunity that will be squandered if these stations were to be simply served up to other giant conglomerates.”

Other consumer and trade groups were equally pleased with the outcome.

American Cable Association CEO Matt Polka said the termination is god news for cable operators as well as consumers.

"Tribune's decision to pull the plug on the Sinclair merger is great news for consumers who will avoid paying the higher pay-TV rates the deal would have caused," Polka said in a statement. "It is especially great news for those consumers served by smaller video providers that have been victimized in the past by outrageous retransmission consent fee hikes and scurrilous signal blackouts by large corporate broadcasters.

"All along, ACA insisted that the proposed Sinclair-Tribune deal would result in harm to the public stemming from higher retrans fees and higher consumer prices," Polka continued. "Sinclair's illusory 'sales' served only to magnify these harms. Few predicted the collapse of the Sinclair-Tribune deal when it was first announced. ACA is pleased that others joined us in refusing to yield to conventional wisdom and continuing to challenge an obvious attempt by Sinclair to subordinate the public interest to its quest to obtain TV station ownership hegemony."

At Common Cause, former FCC commissioner and special adviser to the consumer group Michael Copps said the demise of the deal  was due in large part to grass roots efforts to block it.

“Good riddance to a really bad deal that would have given Sinclair an unprecedented amount of control of our local media. Broadcasters are supposed to serve the needs of the communities where they operate," Copps said in a statement. "But Sinclair has shown its only interest is taking over as many local stations as possible to become a national network at the expense of local programming and diverse viewpoints. In the end there was massive opposition from all sides, which demonstrated Sinclair’s merger was clearly not in the public interest.

"The strongest impact came at the grassroots level. Hundreds of thousands of people, including over 50,000 Common Cause members, called on the FCC to block Sinclair’s merger," Copps continued. "It’s their victory and shows Americans want a media system that promotes local, diverse, and independent journalism. But Sinclair will be back with more deals, as will other media giants. At a time when we need more independent and diverse voices in our media, we must all stay vigilant and engaged.” 

Perhaps the third time is the charm.

Sprint and T-Mobile agreed to an all-stock merger that will value the combined company at $146 billion (including debt) and create a more formidable No. 3 wireless carrier with more than 100 million customers.

Several reports said the two were close to a deal on Friday. 

This is the third time that the two companies have tried to join forces. In 2014 the deal was scrapped after federal regulators hinted that they would not approve the deal. In November, the companies again tried to reach a deal, only to pull the plug after they couldn’t agree on control issues. Earlier this month, the two came back to the negotiating table. 

The control issues appear to have been worked out, with T-Mobile executives dominating the top roles in the new company, which will assume the T-Mobile name. T-Mobile CEO John Legere will run the new company with the same title, with his No. 2, T-Mobile president and chief operating officer Mike Sievert keeping the same role in the new entity. Tim Höttges, current T-Mobile US Chairman of the Board, will serve as Chairman of the Board for the new company. Masayoshi Son, chairman and CEO of Sprint’s owner SoftBank Group and Marcelo Claure, current Sprint CEO, will serve on the board of the new company.

“This combination will create a fierce competitor with the network scale to deliver more for consumers and businesses in the form of lower prices, more innovation, and a second-to-none network experience – and do it all so much faster than either company could on its own,” Legere said in a statement. “As industry lines blur and we enter the 5G era, consumers and businesses need a company with the disruptive culture and capabilities to force positive change on their behalf.”

According to the deal, Sprint shareholders will receive exchange 9.75 Sprint shares for every share of new T-Mobile stock. At closing, T-Mobile parent Deutsche Telekom will control about 42% of the company, Softbank will hold 27% and the public will control 31% of shares.

Deutsche Telekom also will control about 69% of the vote of the new company and has the right to elect nine of the 14 members of the board of directors. The companies expect to close the deal in the first half of next year.

On a conference call with analysts, Claure said the catalyst for changing its mind about the control issues was simple.

“The big change of why we were able to do this so fast is a very simple rule of business: both companies need each other,” Claure said. “The reason why this is going to work is that T-Mobile can’t do the 5G strategy without Sprint and Sprint cannot do it without T-Mobile.”

The next biggest hurdle for the merger will be in obtaining regulatory approval. While the government usually frowns on mergers that eliminate a competitor in any industry – T-Mobile is the third largest wireless carrier and Sprint is the fourth largest behind Verizon Communications (No. 1) and AT&T (No. 2) – both companies have said the deal is necessary for their survival in the cutthroat wireless business. And they claim the deal is necessary to fund the creation of new 5G wireless services.

The combined company – headquartered in Bellevue, Wash., and in Overland Park, Kans. – will employ about 200,000 people. The new entity also pledged to invest up to $40 billion in its new network and business in the first three years after the deal is closed.

On a conference call with analysts, Legere said that there are at least seven or eight large wireless competitors in the industry. Aside form Verizon, AT&T, Sprint, and T-Mobile, Comcast introduced wireless service Xfinity Mobile last year and Charter Communications is launching its own service later this year.

“This isn’t a case of going from four to three wireless companies,” he said.

And though the current presidential administration is thought to be more open to big deals, it isn’t a rubber stamp. The U.S. Department of Justice sued to block the AT&T-Time Warner merger, a move that is expected to be decided by the courts soon. 

According to reports, Dish Network also could play a role in the deal’s approval. Dish already has amassed a huge swath of wireless spectrum and has expressed plans to launch its own IoT wireless service. 

Depending on whether Dish’s wireless offering will compete directly with Sprint and T-Mobile, that offering too could be used as an example that competition won’t be affected.

But others see the deal differently.

“No one but T-Mobile and Sprint executives and Wall Street brokers wants to see this merger go through,” Free Press policy director Matt Wood said in a statement. “Greed, and a desire to reach deeper into people’s wallets by taking away their choices, are the only things motivating this deal.”

Wood added that mergers are supposed to enhance competition and serve the public.
“This deal would do just the opposite: It would destroy competition, eliminate jobs, and harm the public in numerous irreversible ways,” Wood said in the statement.

The complicated deal also had a slew of financial and legal advisors, including PJT Partners, which is serving as financial advisor to T-Mobile; and Goldman Sachs, serving as financial advisor to Deutsche Telekom. T-Mobile Deutsche Bank also acted as financial advisor to T-Mobile. Wachtell, Lipton, Rosen & Katz is providing legal counsel to T-Mobile and Deutsche Telekom, with Cleary Gottlieb and DLA Piper serving as regulatory counsel. Evercore is acting as financial advisor to a committee of independent directors of T-Mobile and Latham & Watkins is providing legal counsel to the committee of independent directors. Morgan Stanley served as financial advisor to Deutsche Telekom. Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, and RBC are providing T-Mobile with committed debt financing to support the transaction, and PJT Partners is advising T-Mobile on the debt financing associated with the transaction.

The Raine Group LLC is acting as lead financial advisor to Sprint. J.P. Morgan is also acting as a financial advisor to Sprint. Centerview Partners LLC is acting as financial advisor to the Independent Transaction Committee of the Board of Directors of Sprint. Morrison & Foerster LLP is lead legal counsel to Sprint and for SoftBank Group. Goodwin Procter LLP is legal counsel to the Independent Transaction Committee of the Board of Directors of Sprint. Skadden, Arps, Slate, Meagher & Flom LLP is regulatory co-counsel and Potter Anderson Corroon LLP is Delaware Counsel. Mizuho Securities Co., Ltd. and SMBC Nikko Securities Inc. are acting as financial advisors to SoftBank Group. 

Sprint and T-Mobile are nearing the finish line in their on-again, off-again merger talks, with some outlets reporting the two could announce a deal as early as this weekend. 

Sprint shares were up about 8% (50 cents each) to close at $6.50 per share on Friday, while T-Mobile was relatively flat, rising about 1% (66 cents) to close at $64.52 each on April 27.

This would be the third time the two wireless companies attempted a union. The first, back in 2014, was abandoned after the two determined a deal would not receive regulatory approval. There is no guarantee that this go-round will pass regulatory muster either, although it is believed the current administration is more open to a deal.

Sprint and T-Mobile also were close to a deal in November, but scrapped the transaction after they could not agree on who would control the combined company.  Earlier this month, the Wall Street Journal reported that the talks were back on. 

According to Reuters, the companies have made progress and are hoping to wrap up a deal by next week.

The merger would make the combined company a solid No. 3 with about 127 million customers, behind Verizon (No. 1) and AT&T (No. 2). Sprint and T-Mobile have argued that they need added scale to compete.

Evine Live shares soared more than 40% in early trading Tuesday after technology website TechCrunch said the home shopping pioneer has been in early talks with Amazon.

Evine shares were trading as high as $1.17 each on Tuesday – up 36 cents each or 44% -- after the TechCrunch report, which said Amazon is interested in TV home shopping and has held early talks with Evine. The article, citing sources familiar with the company, added that other unnamed companies also have expressed interest in Evine. Around midday, the stock had fallen back a bit, priced at $1.9 each, up 28 cents or 35%.

Evine is the third largest home shopping channel, behind leaders QVC and HSN, Inc., which are now part of Qurate Retail Group. While Evine is a distant third – fourth quarter revenue was $193 million, compared to $2.8 billion for QVC and $771 million for HSN – the company is profitable (it posted Q4 net income of $6.4 million, its first profit since 2007) and is available in about 87 million homes.

Evine and Amazon officials both declined to comment on speculation.

According to TechCrunch, Amazon has been interested in the TV retail space for a while, but just for what purpose is unclear. The online retailer has made purchases in unusual areas before – it bought high-end grocery chain Whole Foods in June 2017 for $14 billion  – so an Evine purchase isn’t totally out of character.

Amazon had been said to be on the hunt for smaller cable channels last year, but so far no deal has come to light.

Evine had been a takeover target before. In November, Segel Vision, owner of shopping app Starshop, offered to buy the company in a deal that would have valued it at $175 million, a 105% premium, but pulled that offer a month later after being rebuffed by Evine’s board. 

Evine weathered a proxy battle in 2014 that resulted in new management and a new board of directors. The company, formerly known as ValueVision, changed its name to Evine Live in November of that year  and has undergone several management changes since.

AT&T chairman and CEO Randall Stephenson pretty much stayed on message in his testimony in the ongoing federal antitrust trial concerning AT&T’s pending merger with Time Warner Inc., stressing that the deal is necessary for the distribution giant to continue to compete effectively against over-the-top providers.

Stephenson also dismissed government suggestions that AT&T would use Time Warner content, which includes CNN, HBO, TBS, TNT, Cartoon Network and others, as a club to force higher prices for programming or to lure subscribers to other pay TV services to AT&T.

Stephenson’s testimony followed that of Time Warner chairman and CEO Jeffrey Bewkes, who told the court Wednesday that government claims the combined entity would force higher prices or exclusivity were “ridiculous.”

According to reports, Stephenson said he viewed the Time Warner agreement as a “vision deal” that would help the company compete against emerging OTT providers like Netflix and Amazon. The Time Warner deal is a big shift in strategy for the company into the content arena, a move Stephenson said the company has to make quickly.

“We knew we had to have scale,” he said, according to Variety. 

Stephenson was the second AT&T executive to take the stand in the trial in as many days. Late Wednesday AT&T senior EVP of AT&T-Time Warner integration planning John Stankey, dismissed the government’s fear that the combined entity could join with fellow vertically integrated entertainment company Comcast to withhold content from rival distributors. Stankey said that wouldn’t make good business sense and given AT&T’s many battles with Comcast in the past, was extremely unlikely.

“I’m not going to cooperate with someone I don’t like,” Stankey said of Comcast, according to Bloomberg. “We don’t want to cooperate with Comcast and play their game.”

CBS has made a formal merger offer to a special committee of Viacom’s board of directors, a proposal that values the cable programmer at below its current stock price and is contingent on CBS’s top two executives – chairman and CEO Les Moonves and chief operating officer Joseph Ianniello – remaining in charge of the combined company.

Sources confirmed a report in the Wall Street Journal that said CBS made the offer, basically a ratio of the CBS shares that would be exchanged for Viacom stock, that at least initially values Viacom below its current market capitalization of about $12.5 billion, in the past few days. The senior leadership structure proposed for the new company would be essentially CBS’s current senior leadership. Viacom CEO Bob Bakish is not included in that list but people familiar with the offer say there is no reason he wouldn’t have some role in the combined company. Still, it appears that Bakish, who took the Viacom helm of the troubled network after former CEO Philippe Dauman was ousted after several skirmishes with the controlling Redstone family, is being left out in the cold.

Most analysts expected Moonves to take the top spot – his track record in building CBS into the No. 1 broadcaster alone would ensure that. But its gets trickier as you move down the ranks. Ianniello has proven to be a more than capable No. 2 to Moonves – he was also instrumental in engineering the split in 2005 that cleaved Viacom into two separate entities. But Bakish, a long-time Viacom executive who was tapped for a job nobody wanted, has surprisingly engineered what appears to be the start of a turnaround. Viacom was in turmoil in 2016, with Sumner Redstone battling Dauman, other top executives leaving in droves, ratings falling precipitously and a general consensus that Viacom, once the premier programmer for the youth audience, had lost its mojo.

Bakish wasted little time after he was named permanent CEO in December 2016. By February 2017 he initiated a plan to concentrate on six core networks, invest heavily in original programming and pump new resources into advanced advertising initiatives. Viacom has shown early signs of a recovery – ratings are on the upswing – and Bakish has said that while 2017 was a stabilizing year, he sees growth opportunities ahead. .

A deal that doesn’t include Bakish could be troublesome, according to people familiar with both companies. Shari Redstone hand-picked the former Viacom International executive for the CEO job and dialed back her plans to merge CBS and Viacom in 2016 solely because she wanted to give Bakish more time to execute his plan. 

It is quite possible that the CBS proposal is the start of a longer negotiation. While sources said there is no official deadline to consummate a deal, reports have said both sides would like to at least finalize an offer by May, when both companies are scheduled to release quarterly results.

Investors appeared to favor the CBS offer. CBS shares closed at $52.86 each on Tuesday, up $2.15 each or 4.2%, while Viacom shares fell 3.7% ($1.13 each ) to $29.42 per share.

Whenever I hear talk that Viacom and CBS are mulling yet again whether to recombine the company they tore asunder more than a decade ago, I inevitably think back to that 1980 movie The Blues Brothers, where, on a mission from God, John Belushi and Dan Aykroyd as Jake and Elwood Blues tried to put their R&B band back together one last time. And then I think of Blues Brothers 2000.

Sometimes, things are better left as they are.

The Blues Brothers – regardless of your personal taste in film – was a trendsetter, a showcase for massively under-appreciated musical geniuses (it encouraged at least one 17-year-old high schooler to seek out the collected works of Cab Calloway, John Lee Hooker, Ray Charles and anything touched by Steve Cropper), perhaps the most expensive amalgamation of car chase scenes in movie history and the sole reason that 50-year-old men today still consider Ray-Ban sunglasses cool. (No offense, Tom Cruise)

Blues Brothers 2000 was simply a terrible, terrible mistake, an abhorrent attempt to cash in and recapture lightning in a bottle that fell disastrously short.

If Viacom and CBS are seriously thinking about rekindling merger talks, they have to decide which Blues Brothers they want to be -- an imperfect but original take on an old standard, exposing a new audience to a classic entertainment genre; or a slapdash attempt by some out-of-touch old guys for a big payday? You do the math.

Viacom stock has been on a roller coaster ride over the past several weeks as reports battered back and forth that a deal was on and off. The latest – the boards of both companies said they have appointed independent directors to evaluate a merger – probably means that minus a massive change of heart, a deal is on.

Viacom and CBS’ largest shareholders – Sumner Redstone and his daughter Shari’s -- desire to put the two companies together is no secret. Shari tried to do the same about a year ago while in the midst of an increasingly nasty power struggle with Viacom’s then-CEO Philippe Dauman (she won). She changed her mind after naming Bob Bakish, a long-time Viacom executive, as permanent CEO of the company, impressed she said at the time with a resurgence in energy at the company and a desire to see the new CEO’s plan to revitalize the once dominating brands play out. 

Now the urge to merge has returned, spurred not unsurprisingly by a trio of big media deals in the past 18 months – AT&T’s $108.7 billion pending purchase of Time Warner, Discovery Communications’ $14.6 billion soon to close buy of Scripps Networks and Disney’s $66.1 billion agreement to purchase of certain assets of 21st Century Fox.

The other catalyst for a deal is that the reason for splitting them up in the first place in 2005 – unlocking value, a term that was massively overused in the early part of the century – never turned out the way they thought it would.

Back in 2005, Viacom was supposed to be the big beneficiary of the split – it would no longer be shackled to a low-growth broadcaster (CBS) and could finally take advantage of its youthful demographic and cutting edge content, watching its stock price soar as the ad dollars rolled in alongside ever fattening affiliate fees. CBS would be the utility stock, good for retirees who were more interested in steady, but lower, returns.

More than a decade later, the opposite happened. In a brilliant move, CBS chief Les Moonves embarked on a years-long push to extract cash for retransmission consent. Today, CBS is on track to tally $2.5 billion in retrans revenue by 2020.

Viacom, on the other hand, faltered as SVOD and online video eroded its subscriber base and decimated ad sales. In the meantime, other youth-oriented channels sprang up, increasing competition and a misplaced focus on stock buybacks and financial returns cut into programming budgets, creating a lack of new shows to attract new audiences.

Under Dauman, Viacom stumbled as it chased short-term dollars through SVOD deals for the best programming on its networks – and inadvertently trained younger viewers to not watch commercials and to prefer on-demand to linear. At the same time, CBS grew into the top-rated broadcaster and began to assert its clout. CBS showed just how much power it had when it went dark to about 3 million Time Warner Cable subscribers for the month of August 2014, resulting in the single largest quarterly subscriber defection (306,000 customers) in that cable operator’s history. Later, CBS addressed the growing trend in cord cutting by offering its own OTT service – CBS All Access in 2015– while Viacom continued to stumble.

CBS stock also soared – even in the recent market volatility it still trades well above Viacom’s price, and the logic behind putting the two back together mostly centers on how pairing CBS with Viacom’s channels would give the pay TV programmer a more compelling package in carriage renewals with distributors. In short, there has never been any question about the value CBS would bring to Viacom in a recombination (see above). The sticking point has always been what would it do for CBS?

While that was a harder question to answer a couple of years ago, some believe that now, given the shift toward direct-to-consumer offerings and skinny bundles, adding the Viacom channels would make CBS All Access more compelling. But I’m not so sure.

Just putting them together doesn’t make either company better. Forcing pay TV distributors to carry unchanged or unimproved Viacom channels only diminishes the value of the broadcast network. No offense to Viacom, but if you nail a dead rat to the Mona Lisa, it becomes the Mona Lisa with a dead rat nailed to it, not The Last Supper.


And I know what you're thinking -- Viacom could extract higher affiliate fees if it was paired with must-have CBS, which could be used to develop better programming and benefit both content providers. But pay TV distributors are already madder than the owner of Bob's Country Bunker, and forcing them to pay higher prices for programming they hope will get better isn't going to make them any happier. 

Bakish, who became CEO about 14 months ago after Dauman was fired, has done an admirable job so far, but there is still much to be done. Ratings are on the upswing and there are some new programs in the pipeline, but they are still far behind their peers. In a conference call with analysts to discuss fiscal Q1 results Feb. 8, he said 2017 was a stabilizing year. Now that the company has more solid footing, he sees growth opportunities mostly by executing on the existing plan.

“We're overwhelmingly focused on organic execution and we see a lot of potential ahead,” Bakish said.

So that brings us back to the real reason behind putting the companies back together – because everybody else is doing a deal. Like nature, the media business abhors a vacuum, so why not?

But even that logic doesn’t require a Viacom-CBS re-pairing.

Rosenblatt Securities analyst Alan Gould suggested that a better deal may be CBS and Verizon – it would give the telco a leg up on programming its planned OTT service while giving CBS access to piles of cash. Viacom, he said, would be a better target of Discovery or Sony Entertainment. 

Barclays media analyst Kannan Venkateshwar also liked the Discovery angle, adding in a note to clients that while a deal will not solve Viacom’s deeper problems – subscriber erosion, a declining ad market – it could buy the company some more time to execute its goals.

The analyst wrote that in a Discovery deal, Viacom would bring some added international strength – it has assets like Channel 5 and Telefe in Europe and assets in Latin America and India that would fit well with Discovery. On the studio side, Viacom’s Paramount Pictures could fit well with Discovery shareholder John Malone’s Lionsgate. And CBS’s Showtime premium channel could mesh with another Malone asset – Starz.

Venkateshwar noted that Viacom just began the turnaround process last February, and while CBS won’t cure all it’s ills – he pointed to continued downward trends in fiscal Q1 – it may give the company some legroom as it looks for a more permanent solution.

“Overall, the quarter likely underlines the need for the company to seek an inorganic path out of its problems,” Venkateshwar wrote. “The announced potential combination with CBS is unlikely to solve any of the core performance issues at Viacom but would likely buy the company some time, especially in dealing with distribution challenges. Longer term, however, we believe a combined CBS and Viacom would need to look at further partnerships to gain scale large enough to provide any meaningful clout to survive in the current media ecosystem.” 

CBS and Viacom said late Thursday that their respective boards of directors have formed special independent committees to evaluate the potential combination of both companies.

The move has been expected for weeks. CBS’ and Viacom’s split in 2005 and their largest individual shareholder National Amusements, headed by media mogul Sumner Redstone and his daughter Viacom and CBS vice chair Shari Redstone, tried to recombine the companies in 2016. That plan was abandoned later that year, but in recent weeks reports have surfaced that Shari Redstone had been interested in revisiting a merger. Viacom CEO Bob Bakish and CBS chairman and CEO Les Moonves were said to have had discussions about a possible merger last month and it was expected that talks would resume after a scheduled board meeting of both companies Feb. 1.

In a statement National Amusements said it “supports the processes announced by CBS and Viacom to evaluate a combination of the two companies, which we believe has the potential to drive significant, long-term shareholder value.”

Whether the deal will happen remains to be seen. But some analysts have been pushing for a recombination for months. Moonves, who has resisted a merger in the past, is said to be more open to a deal in light of the recent consolidation activity in the industry. In October, AT&T announced a $108.7 billion merger plan with Time Warner and in December The Walt Disney Co. agreed to buy certain programming assets from 21st Century Fox for $66.1 billion. With its large content brethren getting even larger, some analysts believe that CBS could benefit from Viacom’s programming assets. Viacom, which has struggled with ratings declines and a sluggish ad market, could benefit from CBS’s position as the No. 1 broadcast network in carriage negotiations.      

There were no details as to which directors are on the special committees or how long it will take to evaluate a possible merger. Both CBS and Viacom said they would have no comment until the process is complete.

After meetings with studio and distribution executives in Los Angeles last week, Barclays media analyst Kannan Venkateshwar said he is confident that more consolidation will come in the wake of The Walt Disney Co.’s pending $66.1 billion purchase of Fox.

In a note to clients, the analyst said he sensed heightened urgency in the media industry to scale up, adding that any consolidation could include both horizontal and vertical deals. He added that he expected any objections to the deal from peers to be low, “especially given that other permutations could be in the pipeline.”

Smaller studios like the deal, he continued, because it could mean that overall movie slates would shrink, opening release windows for smaller companies. On the TV side, the analyst added that production volumes are expected to grow for the foreseeable future.

Venkateshwar added that despite some reports to the contrary, most studios see the media strategies of tech giants like Facebook and Apple to be “incoherent.”

“This perception also appears to be causing some reluctance among media executives in licensing content to some tech platforms as lack of a coherent distribution strategy in the first window can suppress the lifetime value of content,” Venkateshwar wrote. “It was also interesting that talent managers view Netflix’s film strategy to be confusing as artists still want their movies to be seen on big screens.”

The analyst continued that those selling content feel there are only about 10 serious buyers of their product – the four broadcast networks, the top 5 cable channels and Netflix and Amazon. And while the value of domestic syndication seems to be waning, the executives did see increased opportunities internationally.

The Walt Disney Co. made its video domination aspirations official Thursday, agreeing to buy key assets from 21st Century Fox in a $52.4 billion all-stock deal ($66.1 billion including debt) that will make the world’s biggest content creator even bigger, fueling its plan to become a streaming video and traditional programming powerhouse.

UPDATE: Iger Says Fox Will Help Accelerate Direct-to-Consumer Plans

When the dust settles, Disney will control the 20th Century Fox movie and television production studios, cable channels FX, FXX and National Geographic, 22 regional sports networks and Fox’s 39% interest in European satellite TV service Sky and its 30% interest in streaming service Hulu, in addition to its Disney studios, cable networks ESPN, Freeform and Disney Channel.

Fox, which stands to become a major Disney shareholder as a result of the deal (Disney plans to issue 515 million new shares for the transaction, giving Fox shareholders a 25% pro forma stake in the content giant), will retain its Fox broadcasting operations, Fox News Channel, Fox Business Network and sports channels FS1, FS2 and the Big Ten Network, which will be spun to shareholders prior to he deal closing to ease the tax burden.

Related: Murdoch: Disney Deal a ‘Momentous Occasion’

Under the terms of the deal, Fox shareholders will receive 0.2745 Disney shares for every 21st Century Fox share they hold. Disney will also assume $13.7 billion of 21st Century Fox debt. Overall, the transaction implies a $66.1 billion value for Fox

Disney chairman and CEO Bob Iger has agreed to stay in that role through 2021, adding another year to his employment deal. Iger was originally scheduled to retire in 2019.

“The acquisition of this stellar collection of businesses from 21st Century Fox reflects the increasing consumer demand for a rich diversity of entertainment experiences that are more compelling, accessible and convenient than ever before,” Iger said in a statement. “We’re honored and grateful that Rupert Murdoch has entrusted us with the future of businesses he spent a lifetime building, and we’re excited about this extraordinary opportunity to significantly increase our portfolio of well-loved franchises and branded content to greatly enhance our growing direct-to-consumer offerings. The deal will also substantially expand our international reach, allowing us to offer world-class storytelling and innovative distribution platforms to more consumers in key markets around the world.”

Also as part of the deal, Fox will continue to pursue the purchase of the remaining 61% in Sky it doesn’t own. Once that deal is completed, assuming it is done before the Disney deal is closed, Disney would assume full ownership of Sky.

With the Fox assets, Disney will be able to pursue its direct-to-consumer strategy full bore. An ESPN-branded offering, ESPN Plus, is scheduled to debut in 2018 with a Disney content product expected the following year. With the Fox studio assets, that Disney-branded product just got more robust.

The acquisition is expected to yield at least $2 billion in cost savings from efficiencies realized through the combination of businesses, and to be accretive to earnings before the impact of purchase accounting for the second fiscal year after the close of the transaction.

“We are extremely proud of all that we have built at 21st Century Fox, and I firmly believe that this combination with Disney will unlock even more value for shareholders as the new Disney continues to set the pace in what is an exciting and dynamic industry,” said 21st Century Fox executive chairman Rupert Murdoch in a statement. “Furthermore, I’m convinced that this combination, under Bob Iger’s leadership, will be one of the greatest companies in the world. I’m grateful and encouraged that Bob has agreed to stay on, and is committed to succeeding with a combined team that is second to none.”

Media consolidation critic Public Knowledge was quick to call for a tough government review of the Disney-Fox deal, which it said would combine must-have programming, notably sports, and which it also said would lead to higher prices for video content.

“Antitrust authorities should thoroughly examine the incentives and power a combined Disney-Fox may have to harm consumers and competition," said PK senior policy counsel Phillip Berenbroick.

"Disney’s acquisition of Fox’s regional sports networks, which carry thousands of local NBA, MLB, and NHL games, as well as college athletics, is also a cause for concern," Berenbroick added. "Disney’s ESPN-family of networks is already the most valuable, and most expensive, sports programming network in the cable bundle. The addition of Fox’s regional sports programming may significantly increase Disney’s bargaining power over local cable providers because consumers demand access to their local professional and college athletics.

"The combination of these assets may also give Disney the power to negotiate even higher prices and more preferential treatment for the rest of its video programming, as well as unprecedented control over both national and local televised sports." he said.

Comcast has officially dropped out of the running for 21st Century Fox assets, saying in a statement that it did not receive the “level of engagement” it believed necessary to make a serious offer, and clearing a path for The Walt Disney Co. to make a bid for the properties later this week.

The news was first reported by Reuters.

Comcast has been in talks for weeks about purchasing a mix of assets including the 20th Century Fox film and TV production studios, cable channels FX and National Geographic and Fox’s 39% interest in European satellite TV company Sky. Those are the same assets being pursued by Disney, and now with Comcast out of the picture, the programmer could strike a deal for the assets later this week.

“When a set of assets like 21st Century Fox’s becomes available, it’s our responsibility to evaluate if there’s a strategic fit that could benefit our company and our shareholders,” Comcast said in a statement. “That’s what we tried to do and we are no longer engaged in the review of those assets. We never got the level of engagement needed to make a definitive offer.”

With the Disney-Fox deal moving closer and closer to inevitability – most reports say that it could be announced as early as next week – Sanford Bernstein media analyst Todd Juenger said that despite earlier beliefs that Fox would never sell, market forces and personal taste may have played a role in the decision to come to the table.

In a note to clients, Juenger wrote that faced with a decision to either build the infrastructure needed for its streaming video plans or buy them, Disney choose the buy path. While that will require a lot of upfront capital, it will also take a lot less time, Juenger said, adding that the Fox assets are perhaps the closest thing to giving Disney what it needs – a strong content studio, sports assets and popular cable networks.

“But Fox would never be for sale, right?” Juenger wrote. “Well, apparently, hell has frozen over, and (most of) Fox is for sale.”

Juenger speculated that the change of heart at Fox, which just a few years ago was a buyer – remember its failed attempt to buy Time Warner? -- could have been caused by two factors: a realization that its business is a declining asset and its peak value is now; or that CEO James Murdoch is frustrated over sexual harassment scandals and the conservative bent of Fox News and wants to get out.

Both scenarios, Juenger wrote, have a “ring of truth” to them.

As far as the deal goes, Juenger estimates that the Fox assets Disney will be acquiring are worth about $57 billion, leaving about $31 billion in properties – Fox broadcasting, Fox News, FS1, etc. – that could be combined with the Murdoch’s newspaper business (News Corp.) and perhaps taken private.

One asset that appears to be a key piece of the deal – Fox’s 39% interest in the Sky satellite service in Europe, could also be a wrinkle in the deal. Fox is in the process of buying the 61% of Sky it doesn’t own – the Murdochs have said they expect it to clear by the end of the year – but a sale will likely hold up the regulatory process even further. Juenger estimated that UK regulators put the deal on hold again, wait for the Disney deal to pass U.S. regulatory muster and then start the whole process again.

Given the size of the deal – Juenger estimated that Disney would pay $78 billion for the Fox assets (a 30% premium) -- it would need to extract about $1.6 billion in synergies to make the transaction break even for Disney on an earnings per share basis.

The analyst added there are some very good reasons for Disney to buy the Fox properties, mainly that it gets to market faster without having to weather the many years of earnings declines a build out would require. But there are costs, too. Juenger estimated that Disney will have to pay about $20 billion more than what the Fox assets are worth to get a deal done and some of the assets – FX Network – are not family-friendly.

“The Studio and National Geographic make perfect strategic sense to us,” Juenger wrote. “Beyond that, it gets questionable. The FX/FXX networks have a pedigree of having created some of the most memorable serialized drama series on cable television. They are also filled with violence, language, and sexual themes that absolutely do not fit with the 'Disney' brand.”

So Disney has an important choice to make, the analyst continued. If it wants to build an OTT service for the widest possible audience, including the FX networks in the mix with their edgy, grown-up programming is the way to go. It gets trickier if it wants to be true to a brand that is arguably the most well-known in the media space. If that's the case, then it has to protect that brand at all costs.

“One way Disney could bridge this gap is to put the 'R-rated' content into a different brand wrapper – such as Hulu,” Juenger suggested. “On one hand, this fragments Disney's OTT offerings in an already fragmented space. But, Disney could also bundle/unbundle its different OTT products (sports, 'Disney', Hulu) in packaged offerings to consumers.”

But that also hinges on whether Disney ends up with full control of Hulu – it will acquire Fox’s 30% interest in the deal, bringing it to 60%, but it still has other partners in NBCUniversal and Time Warner for the service.

The sports assets also present another dilemma – sports programming is one of the biggest drivers of live TV viewership, but RSNs have been a thorn in some distributors’ sides because of their high cost and consumers who believe they shouldn’t pay for them if they don’t watch them.  

"Perhaps Disney is willing to live through the pain of that transition, to eventually emerge with a more appealing OTT sports product that offers both ESPN and the RSN in each applicable market,” Juenger wrote.

The analyst was less optimistic on the deal’s impact to Disney shares and the cable network sector in general. While Disney could be considered to be the Walmart of the content space – the old-school retailer is behind Amazon but receives a premium from investors because it has scale – it all comes down to the multiple the market assigns the stock. Currently trading at about 15 times earnings, that multiple would need to climb to 20 times to justify the deal.

“The market would have to *really* believe Disney is creating something special, to re-rate the multiple several turns upward in the face of all the downward pressures,” Juenger wrote.

As far as other stocks in the sector like AMC Networks, Discovery Communications and Viacom, the signal Disney (we’re not big enough) and Fox (get out while you still can) are sending presents another problem. Juenger doesn’t see any larger potential buyer for those companies, adding they may have to combine together themselves, probably at little or no premium.

“On that basis, especially if Disney acquires Fox, we would expect the already bleak outlook for these little, over-levered pure play cable network companies to be even worse,” he wrote.

Illustration by cpuga/Getty Images.

21st Century Fox CEO James Murdoch’s flirtation with the top spot at The Walt Disney Co. may have to wait a bit, after a report in the Wall Street Journal said current Disney chair and CEO Bob Iger would likely extend his employment deal at the company should it acquire certain assets from Fox.

Disney is reportedly in deep discussions with Fox concerning the purchase of its movie studio, regional sports networks, cable channels FX and National Geographic and other assets valued at more than $60 billion.

Related > Report: Disney, Fox Close in on Deal

According to reports, people familiar with the matter speculated that one of the benefits of the deal would be that Murdoch could step in to replace Iger as CEO, thus solving a nagging succession problem at Disney over the past several years. Iger had originally intended to retire as chairman and CEO at Disney in 2015, but has extended his deal each year – he is scheduled to step down in 2019 – as a successor has been hard to find.

Former Disney chief operating officer Thomas Staggs was the last serious candidate considered for the role,  but he resigned from the company in 2016 after it became apparent that he did not have the support of the Disney board of directors.

The deal, which could be announced as early as next week, would likely take until the end of 2018 to obtain all the necessary federal approvals, the Journal said. Integrating the assets could take up to another year, and would be even more difficult with a new CEO at the helm, adding to the need for Iger to extend his current contract. It is plausible that James Murdoch could take over as Disney CEO in 2020, once the integration is complete.  

Murdoch has reportedly been under pressure at Fox after weathering sexual harassment scandals at its Fox News unit and a phone-hacking scandal at its U.K. tabloid newspapers in 2012.  According to an earlier report in the Journal, Murdoch has at times “felt like a CEO in title only.”

AT&T vowed to fight the U.S. Department of Justice’s move Monday to block its $108.7 billion merger with Time Warner Inc., adding that the government has no legal grounds to stop the deal, which has been slogging through the federal anti-trust approval process for more than a year.

“We are going in to this to win,” AT&T chairman and CEO Randall Stephenson told reporters in a press conference Monday night. “We are very confident and we intend to win.”

Stephenson said on the call that AT&T has “offered concrete and substantial solution” and will continue to offer them to get the deal closed. He declined to say what those solutions were.

AT&T first announced its agreement to acquire Time Warner in a deal valued at $85 billion ($108.7 billion including debt) on Oct. 22, 2016. At the time, the companies believed the deal would take about a year to complete.

The deal would combine the largest distributor – AT&T with about 25 million pay TV customers – and the second largest content provider. Time Warner includes the Warner Bros. movie studios, and Turner Networks including content brands like CNN, Home Box Office, Cartoon Network, TNT, TBS and TCM.

AT&T had been confident that because the merger was a vertical combination – neither company has any competing businesses – it would have easily moved through the approval process. But that became less clear shortly after the deal was announced, when then-presidential candidate Donald Trump said he would block the deal if he were elected.

When Trump did win the election, business leaders believed he would back off on his promise and let the deal through. But Trump has battled with CNN since becoming President – he regularly calls the network “fake news” – and it became clearer in the past month that the deal may face some resistance from the government.

Stephenson had contended earlier that CNN divestiture was never put on the table as a condition of the deal, but he again said at the Monday press conference that selling the network was not an option.

“There has been a lot of reporting and speculation whether this is all about CNN,” Stephenson said. “Frankly, I don’t know. But nobody should be surprised that the question keeps coming up, because we witnessed such an abrupt change in the application of antitrust law here. The bottom line here is we cannot and we will not be party to any agreement that would even give the perception of compromising the First Amendment protections of the press. Any agreement that results in us forfeiting control of CNN, whether directly or indirectly, is a non-starter. We believe quite strongly that any divestiture of AT&T assets or Time Warner assets is not required by the law. We have no intention of backing down from the government’s lawsuit.”

Earlier this month, newly appointed Assistant Attorney General Makan Delrahim, head of the DOJ’s anti-trust division, had hinted that he would apply structural conditions rather than behavioral conditions to mergers, and word leaked to several news outlets that the government would seek a divestiture of either Turner or DirecTV to get the deal approved.

Related: Makan Delrahim Lays Groundwork for Divestiture

In a statement, Delrahim said the merger would “greatly harm American consumers. It would mean higher monthly television bills and fewer of the new, emerging innovative options that consumers are beginning to enjoy.”

AT&T has argued all along that the DOJ has no precedent to stop the merger – neither AT&T nor Time Warner compete in any business and the deal would mot remove a top competitor from the industry.

“Today’s DOJ lawsuit is a radical and inexplicable departure from decades of antitrust precedent. Vertical mergers like this one are routinely approved because they benefit consumers without removing any competitor from the market. We see no legitimate reason for our merger to be treated differently,” AT&T Senior EVP and General Counsel David McAtee II said in a statement. “Our merger combines Time Warner’s content and talent with AT&T’s TV, wireless and broadband distribution platforms. The result will help make television more affordable, innovative, interactive and mobile. Fortunately, the Department of Justice doesn’t have the final say in this matter. Rather, it bears the burden of proving to the U.S. District Court that the transaction violates the law. We are confident that the Court will reject the Government’s claims and permit this merger under longstanding legal precedent.”

Now the DOJ will have to prove that the deal violates anti-trust law. That won’t be easy. The DOJ hasn’t successfully blocked a vertical merger in 50 years. And the last time it attempted to block a vertical deal – U.S. v. Hammermill Paper Co. in 1977 – it was rejected by the court.

But the government was successful during the Nixon Administration of blocking Ford Motor Co.’s purchase of Autolite, one of two independent sparkplug manufacturers in the country at the time. The government was successful in that case because it involved static technologies, high concentration levels and barriers to entry, according to AT&T.

“In contrast AT&T and Time Warner are both in wildly competitive, fluid and innovative industries with new entrants on a daily basis,” AT&T said in a statement. “Neither company has market power.”

But the lawsuit could delay the process long enough for both parties to call it a day and walk away from the transaction – much like Comcast did in 2015 when it discovered the DOJ would contest its merger with Time Warner Cable. While this merger is different – Time Warner Cable was the second largest distributor in the country and the combined company would have huge dominance in broadband nationally – some have argued it would place too much power in once company’s hands.

The government has cited one case where its opposition helped scratch a big deal – Semiconductor maker Lam Research’s failed purchase of KLA Tenecor in 2016. AT&T argued that the DOJ did not officially file a suit to block that deal, but like the Comcast-TWC merger, let it be known that it would oppose the union. The parties simply walked away from the deal. And that may be the DOJ’s whole point.

But at least for now, AT&T seems adamant about having its day in court.

“Voluntary abandonment is not precedent,” AT&T argued in a statement. “No court decided anything because there was no case.

Daniel Petrocelli, retained counsel from O'Melveny & Myers for both AT&T and Time Warner said at the press conference that he does not expect the suit to drag on in the courts.

“This is not a case that is going to drag on for months and months,” Petrocelli said, adding that he was hopeful a trial could proceed in as early as 60 days. “The DOJ will be hard pressed to tell the court they are not ready.”

AT&T cited hundreds of vertical mergers that have been approved by DOJ since the Ford deal, including 2011’s merger of Comcast and NBC Universal. While that deal was loaded with conditions –many of which will expire next year, speculation has been high that the DOJ believes it may have missed the boat on that deal, allowing Comcast to amass too much content power. According to some observers, the agency doesn’t want to make the same mistake with AT&T-Time Warner.

But whatever the government feels about big deals – one worry is that AT&T would make some content from Time Warner exclusive to its own distribution properties – it may have little choice. AT&T claims there

“The critical and uncontested fact is that this merger neither eliminates any competitor nor increases concentration in any market,” AT&T said in a statement.

Media watchdog groups had been opposed to the deal from the start, but have expressed some trepidation over the reports that the action could be at least in part motivated by the President’s own bias toward CNN. Many have said that would create a dangerous precedent.

“Blocking this merger is the right thing to do — and we hope the Justice Department is doing it for the right reasons,” Free Press CEO Craig Aaron said in a statement. “This deal would give AT&T way too much power to undercut competitors and raise costs on TV viewers and internet users everywhere.

“…It’s refreshing to see the Justice Department doing something about this deal,” Aaron continued. “However, we remain very troubled by President Trump’s threats to punish outlets like CNN that have aired critical coverage of the administration. The Justice Department must demonstrate that Trump’s saber-rattling has nothing to do with this suit. It could start by giving the same level of scrutiny to other mega-deals like Sinclair’s proposed merger with Tribune. But the bottom line is that the public would be best served if this merger is scrapped.”

Time Warner shares were down by about 1% on Nov. 20 and were priced as low as $87.15and as high as $88.50 in after-hours trading.

Some observers have warned that the DOJ action could put a chill on future media mergers, especially those involving companies that have been critical of the president. Stephenson agreed.

“I would suggest that this lawsuit has the whole world questioning what they will, can and cannot do,” Stephenson said. This throws a huge degree of uncertainty to anybody contemplating joint ventures, anybody contemplating M&A. That’s one of the key concerns about this. To take suddenly without any notice and just upturn 50 years of precedent on a transaction like this can have nothing but a freezing effect on commerce in general.”

AT&T chairman and CEO Randall Stephenson continued to hammer home that he would not sell key assets to facilitate regulatory approval of his pending deal to buy Time Warner, adding that if the agency rejects the merger, he’s ready to go to court.

“We would have to ask ourselves, is a negotiated settlement a better or worse outcome than if we litigate,” Stephenson said at the New York Times Dealbook conference Thursday. “If we feel like litigation is a better outcome, then we would litigate. If we can get a negotiated settlement, for time, and energy and money you would obviously go with a negotiated settlement.”

But he added that if the government wants to go to court, he hopes it will be soon.

“If we’re going to go to litigation, our preference would be sooner is better,” Stephenson said. “We’re prepared to litigate now.”

Stephenson seemed to chafe most at reports he had offered to sell news network CNN, the object of President Donald Trump’s unwavering consternation, to get the deal done. He added that he has not personally received any pressure from the government to sell the cable news network.

But while the emphasis has been on CNN, early reports on problems with approvals centered on DOJ requesting AT&T sell Turner Broadcasting, CNN’s parent, not just the network.

“Selling CNN makes no sense in the context of what we are trying accomplish,” Stephenson said. But when asked if he would sell DirecTV instead, he hedged a bit, adding that conversations with the DOJ are highly confidential.

“What gets discussed inside that room is highly privileged. I cannot go there,” he said. It’s so important that when you’re in these kind of negotiations with Justice, that they remain confidential because you can’t have open and candid conversations about a negotiated settlement if everything is leaking. What happens inside that room needs to stay inside that room.”

But later, he reiterated that he has no intention of selling any large assets to appease the DOJ.

“You shouldn’t expect us to sell something larger [than CNN],” Stephenson said, adding that pairing Time Warner's content with DirecTV's distribution is a key component of the deal. “It’s illogical. It’s why you did the deal. To suggest selling some of the key franchises makes no sense.”

Reports have suggested that President Trump is pressuring the DOJ to force a sale or spin-off of CNN, a network that he has repeatedly called “fake news.” At the Dealbook conference, CNN’s Reliable Sources host Brian Stelter asked Stephenson from the audience if he had any reason to believe that the problems the deal is facing at the DOJ are being caused by the President’s interference.

“I have no reason to believe that,” Stephenson said. “My only interaction with anybody in the federal government on this deal, has been with the Department of Justice.”  

Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak raised his rating on Dish Network to "buy" Monday, adding that the satellite TV company could be more attractive in the wake of the failed Sprint-T-Mobile merger.

Sprint and T-Mobile officially called it quits Saturday, saying after months of talks about a possible merger that no deal could be reached.  Sprint on Sunday announced an MVNO Agreement with Altice USA, unrelated to the merger action. 

In a note to clients Monday, Wlodarczak wrote that Sprint's loss could be Dish's gain, either through a spectrum sale to another carrier like T-Mobile or Verizon, or an outright sale of the company. Dish has wireless spectrum licenses that are valued at about $10 billion, and minus a Sprint/T-Mobile merger those assets could be rising in value.

Dish stock already was on the rise in early trading Monday, up 6.7% ($3.23 per share) to $51.30 each.

"In our opinion, post the T-Mobile-Sprint deal failure there is a reasonable chance that T-Mobile could make a play for Dish or Dish spectrum as it would immediately vault the most disruptive U.S. wireless player into the leading U.S. spectrum position (w/ substantially more spectrum than underpins Verizon’s “best in class” network)," Wlodarczak wrote. "This possible move could force Verizon to counter-bid for Dish spectrum (or possibly the entire company) as Dish spectrum is ideally suited for Verizon and to keep it out of T-Mobile’s hands."

The analyst pointed to Verizon's bidding war with AT&T over Straight Path earlier this year, which Verizon ultimately won.

"In our view, we don’t see what T-Mobile management has to lose in engaging in talks with Dish about a possible deal (either they get high quality spectrum or force Verizon to overpay)," Wlodarczak wrote. " In addition, AT&T, post their Time Warner deal, could (and frankly should) be interested in purchasing Dish’s core DBS business taking advantage of a potentially more laissez faire regulatory climate/emergence of V-MVPD’s, to significantly bolster their DirecTV business (and help to justify the original questionable DirecTV deal) by creating a SatTV monopoly in ~10-15M US households, increased programming scale and massive synergies at a likely very attractive price."

Sprint shares, hammered earlier this week after reports surfaced that merger talks with T-Mobile had broken off, were up more than 4% on Friday after CNBC said the two parties are working out their differences, with the parents of both set to meet this weekend.

Sprint shares rose more than 4% (27 cents each) to $6.70 per share in afternoon trading after CNBC’s David Faber said T-Mobile parent Deutsche Telekom was set to meet with Sprint owner Softbank over the weekend. The stock closed at $6.67 each on Nov. 3, up 3.7% or 24 cents per share. T-Mobile shares were up moderately, closing at $58.90 each, up 60 cents or 1% on Friday.

Earlier this week it appeared that talks had broken off amid reports that Softbank had balked at a deal that would give Deutsche Telekom clear control of the combined company. Sprint shares declined more than 9% on Oct. 30 on the news, while T-Mobile shares dipped nearly 5%.

According to CNBC, Sprint and T-Mobile are still apart on governance and pricing issues, but are willing to meet to iron out those differences.

A report in the Wall Street Journal Nov. 2 said Sprint CEO Marcelo Claure met with T-Mobile CEO John Legere on Wednesday, keeping the deal talks alive. The Journal said T-Mobile has made a revised offer to Sprint, and that a deal could be reached in weeks or not at all.

AT&T is reportedly inching closer to closing its much anticipated $108.7 billion merger with Time Warner Inc., and according to an excellent article in Vanity Fair that maps out some legitimate fears on the content side concerning the merger, it was revealed that AT&T has a new name picked out for the Time Warner unit. While AT&T is keeping that new moniker tightly under wraps until the merger is officially approved, your humble reporter has come up with a few tongue-in-cheek suggestions. Feel free to add your own in the comments.

AT&T Content & Entertainment Delivery Services:  In keeping with the telco tradition of sucking the life out of brands and relegating them to names that simply convey what they technically do. (For reference, see: Tele-Communications Inc. is now AT&T Broadband & Internet Services).

EIC (Eat It, Comcast): Breaking with earlier said telco traditions, AT&T decides to take the low road, pointing out that it not only bests the largest cable company in terms of total video subscribers (25 million vs. 22 million) it also has a bigger content operation (Time Warner vs. NBC Universal).

TimeDirecTVWarnerWirelessNow: As the mobile, video, satellite and OTT worlds collide, so do their brand names.

TWE: The Deuce: A mash up of one of Time Warner’s former entities – Time Warner Entertainment – and its critically acclaimed series about breaking into the content industry in the 70s, The Deuce. No word on whether Randall Stephenson or John Stankey will be playing a dual role, a la James Franco.

AT&TTW: Another acronym that makes little sense, but probably fits nicely on a hat, mug or other tchotchkes at the HBO store.

Jeff Zucker’s Mother Ship: A mash up of the CNN chief, who has overseen one of the biggest turnarounds in cable with the news network besting Fox News for the  first time ever this year; and a quote from an unnamed CNN executive in the Vanity Fair piece that likens its new corporate overlords to aliens.

Stankey Turner Overdrive: Combining AT&T Entertainment Group chief John Stankey, Turner Networks and Canadian rock group BTO. You Ain’t Seen Nothin’ Yet.

Danaerys Inc.: Taking the name of the Mother of Dragons from its popular HBO show, Game of Thrones invokes power, intelligence, strength and if all else fails, fire.

Courageous: John Malone named Liberty after his yacht, so why can't AT&T name Time Warner after Ted Turner's old boat? The name invokes the new company’s adherence to the values of its past, as well as the value of a buck.

Happy Fun Time Cartoon Video Game Networks: In keeping with the convergence of media, video content and the internet, AT&T decides to name its content unit using popular SEO terms. 

AT&T said it has extended the termination deadline for its planned $108.7 billion purchase of Time Warner Inc. for a “short period” as the deal continues to wind its way through the federal approval process.

AT&T proposed purchasing Time Warner on Oct. 22, 2016, a deal that would combine the largest pay TV distributor in the country with the second largest content producer. At that announcement, the companies anticipated the regulatory approval process would last about one year.

The deal is still being scrutinized by the U.S. Dept. of Justice, but so far the agency has not rendered a decision.

In a filing with the Securities and Exchange Commission Monday, AT&T said it has extended the termination date for the merger for a “short period of time to facilitate obtaining final regulatory approval required to close the merger.”

According to the original deal documents, either party could terminate the transaction if it did not receive the necessary approvals by Oct. 22, 2017, or in the case of specia extensions, by April 22, 2018.

AT&T anticipates it will receive U.S. approval for the deal by the end of this year.

The company added in a separate statement that it has receved its final approval outside of the U.S., from Brazilian anti-trust authority Conselho Administrativo de Defesa Econômica (CADE).

"We appreciate the hard work by CADE to review and evaluate the AT&T-Time Warner merger and approve it based on its benefits to Brazilian consumers," said AT&T senior executive vice president and general counsel David McAtee in a statement.

The approval was made with targeted conditions to address specific issues, but similar to earlier nods the transaction has received from authorities in Chile ad Mexico, the approval does not require AT&T or Time Warner to divest of any assets.

So much for taking a breather.

European telecom giant Altice N.V., just two months after spinning off its U.S. cable operations into a separate publicly traded company, is apparently weighing the possibility of going after the second biggest fish in the domestic pond – Charter Communications.

According to CNBC, Altice N.V. chairman and founder Patrick Drahi is lining up bankers to launch a possible takeover of Charter, the second largest cable company in the country, with 17 million video customers. While there is no guarantee Altice would actually make a formal bid, the company has long coveted Charter assets. It was an early bidder for Time Warner Cable in 2015, a prize that Charter eventually won with a bid of more than $80 billion.

Analysts have estimated that any bid for Charter would have to be north of $500 per share to get the company’s attention. That would value the MSO at more than $200 billion.

Charter stock was priced at $401 per share in early trading Wednesday (Aug. 9), up 3% or $11.25 each. The stock settled down later in the day, up 1.4% ($5.41 each) to $395.06 per share. Altice USA stock, which was down 2.3% (71 cents each) to $30.35 per share early Wednesday, was about even at $30.88 each (down 18 cents) later in the day.

Charter has been the subject of merger talk for weeks, with speculation heavy around possible offers being weighed by SoftBank (parent of No. 4 U.S. wireless company Sprint) and Verizon Communications. Charter has declined comment on all of the merger rumors.

Altice USA spun off as a separate public company on June 22, almost exactly one year after closing its purchase of Cablevision Systems on June 21, 2016. Altice USA stock has performed well – it rose 14% in its first two days of trading to $34.30 per share. The stock has settled down since then, but was still above its $30 per share offering price on Wednesday.

Altice USA and its parent are expected to be aggressive buyers of cable properties in the U.S., but Altice N.V. has said it will concentrate on organic growth for the time being.

However, at its rebranding launch in May, Drahi acknowledged past comments where he said being any lower than third in a market wasn’t worth the trouble. With about 4.9 million residential and business customers, Altice USA is the fourth largest cable operator in the country and the eighth largest telecom provider.

“I said, ‘If we are not No. 1, or No. 2, or No. 3, it’s not very exciting,’” Drahi said. “How do you get there? I really don’t know. Or if I do, I can’t say.”

But he later offered a hint at his blueprint for success in other markets.

“I have always been very clear, that first is fixed [networks], then mobile, then content,” Drahi said. “We started in the U.S. with cable. We are too small in cable to go mobile at the moment. But everything is open. We will see.”