The U.S. Department of Justice is once again getting in the way of a possible merger between the country’s two big satellite TV operations, DirecTV and Dish Network.
Citing what appear to be real inside sources, the New York Post reports that DOJ officials are still cool to the combination of the two declining pay TV companies. Regulators reportedly want time for fixed 5G wireless internet services to proliferate to broadband-deprived rural areas, regions in which satellite remains an in-demand option for delivering pay TV services.
Regulators fear combining the two companies would result in higher prices for rural consumers, including those situated on tribal lands.
After waiting over a year for the DOJ to pore through its antitrust concerns regarding its $85 billion purchase of Time Warner Inc., AT&T, meanwhile, is said to be reluctant to get into any deal that once again raises regulator antitrust hackles.
Two weeks ago, the Post reported that AT&T was in the second round of securing bids for its struggling DirecTV operation. Bids, the report said, were coming in on the low side, at around $15.75 billion, plus $18 billion of assumed debt. Surprised analysts had pegged the figure in the $20 billion range. AT&T paid $49 billion for DirecTV, closing on the deal in July 2015 after haggling for more than a year with the DOJ.
Analysts have been publicly encouraging of a DirecTV-Dish merger. On Oct. 8, LightShed Partners’ Walter Piecyk blogged, “While AT&T may elect to take a multi-step approach that involves private equity, we believe the end game for DirecTV is Dish. This would provide a material deleveraging event for both companies and present a new challenge for broadcast/cable network programmers.”
Regulators reportedly also stood in the way of a proposed tie-up between the two satellite companies two years ago. And the agency famously sued to stop a $26 billion merger of DirecTV and the erstwhile EchoStar-Dish in 2002.
Eighteen years ago, the two satellite TV companies were sexy, up-and-coming pay TV alternatives to cable.
Today, DirecTV has shed a third of its user base since AT&T bought it, closing the second quarter with just 14.3 million subscribers. Dish Network has only around 9 millions remaining linear satellite TV subscribers, and the company is investing virtually all of its available resources these days into building out a national 5G wireless network.
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