DirecTV and Dish in merger talks once again despite past antitrust concerns
DirecTV and Dish Network are in fresh talks to merge after years of on-again, off-again wrangling and multiple clampdowns from federal antitrust officials, The Post has learned.
The satellite-TV giants attempted a merger nearly two decades ago but the Federal Communications Commission and the Justice Department’s antitrust division stopped it. Two years ago, the DOJ also quietly warned executives off a prospective deal, concerned about the nascent rollout of 5G, sources said.
Now, however, insiders are optimistic a Dish-DirecTV deal could pass regulatory muster as concerns about the market power of the struggling companies have waned, sources said. Some executives likewise argue that a merger could give a surprise boost to the US’s troubled rollout of 5G wireless services.
Talks between the satellite-TV giants are being pushed forward by private-equity behemoth TPG Capital, according to sources close to the situation. TPG bought 30 percent of DirecTV from AT&T in a deal last February that gave the struggling company an enterprise value of $16.25 billion.
“TPG is driving the conversations. They want their investment back,” a source close to the situation said.
But Dish Chairman Charlie Ergen — a former poker player famous for his tough negotiating — appears to be dragging his feet on finalizing a deal, demanding significant voting shares and a say in key decisions at the combined company despite his minority position, according to sources.
“They’re actively having conversations and trying to iron out the details,” a source added.
Officials at DirecTV and Dish declined to comment. TPG also declined to comment.
Ergen has long held that a deal is “inevitable” and is just a “timing issue” whether it’s a decade or a day. Merging the two could result in $1 billion in cost savings. And given the state of the satellite-TV market, Ergen may have no choice but to get a deal done as both services continue to hemorrhage customers.
“I wouldn’t want to be a CEO rolling the dice with the DOJ right now,” one antitrust expert who spoke on the condition of anonymity told The Post. “The political environment is so tough.”
Nevertheless, people close to the deal believe both companies are so pressured that the DOJ will recognize their need to combine. DirecTV currently has just over 15 million customers, down from more than 25 million subscribers in 2017, according to company filings. Dish has 8.4 million subscribers, down from more than 13 million.
“They’re coming together because it makes all the sense in the world,” a person close to the deal adds. “Both are decaying, dying channels — you can’t argue there is an antitrust issue.”
In 2020, regulators with the DOJ’s antitrust division had told AT&T executives that a marriage between DirecTV and Dish would have to wait until faster 5G wireless service is more widely available in rural markets, two sources close to the situation said. Regulators were concerned that a combined company could jack up the prices of satellite TV.
However, the recent US infrastructure package allocates $65 billion to build out rural broadband. Once more Americans in remote areas get faster internet access, they too may look to cut the cord and buy streaming packages, providing competition to the satellite providers.
The question, according to some insiders, is whether regulators will block a merger of the two dominant satellite providers before broadband infrastructure is built in rural areas or whether they will wait until it is in place.
“The FCC and DOJ would likely both conclude that having one strong satellite competitor is better than none at all — and the future is not terribly bright even together but especially alone,” telecom analyst Craig Moffett told The Post.
A US rollout for 5G, meanwhile, is far behind schedule. AT&T and Verizon are planning to launch 5G this month but after recent objections from the Federal Aviation Administration have agreed not to activate service around 50 airports. The FAA’s concern is that 5G antennas will interfere with airplane instruments.
Giving AT&T Chief Executive John Stankey approval to merge the telecom giant’s majority DirecTV stake with Dish could help finance a new 5G alternative solution, some sources argue.
Dish, meanwhile, has committed to build out a 5G network that will serve 20 percent of the US by this summer and 70 percent of the US by summer of 2023. Dish has invested in 5G equipment over the last two years but has failed to get a single city covered. If Ergen doesn’t meet the buildout requirements, the FCC could force him to relinquish his 5G spectrum.
While Ergen appears to be in a tight spot, he also has been known to blow up deals, sources told The Post. “He’s left almost-consummated deals in his wake — you’re not confident it will get done until the ink is dry.”
Still, a source close to Ergen says he is in an increasingly “desperate” position and “needs the money.”
“They’re very close,” another source said. “It’s very complicated but it absolutely will happen.”
