Dish Network Chairman Charlie Ergen has once again weighed in a potential satellite TV merger between Dish and DirecTV.
During today’s fourth-quarter earnings call, Ergen again called a Dish-DirecTV combo “inevitable” while painting a dire picture for satellite TV if the two companies don’t merge.
“Otherwise, both companies will just melt away and there’ll be no service for customers. Reasons to not allow it don’t exist anymore. I think it’s inevitable, but I don’t know the timing of it,” he said.
Ergen’s latest comments on a potential merger come amid renewed speculation that a deal is in the works. According to the New York Post, private equity firm TPG Capital is pushing a merger in hopes of cashing in on its investment in DirecTV, but Ergen may be holding up the deal by making demands for “significant voting shares and a say in key decisions.”
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Deal hurdles notwithstanding, some media analysts agree that the regulatory environment has become much friendlier to the idea of a satellite TV merger. New Street Research’s Blair Levin pointed toward increased pay TV competition from telcos and virtual MVPDs as one reason why a Dish-DirecTV merger—which was blocked nearly 20 years ago—might gain the OK from U.S. regulators.
“If the antitrust authorities agree, the government would likely deem that market significantly more competitive, with the merger unlikely to cause an anti-competitive effect,” wrote Levin in a research note, pointing out that the percentage of Americans who subscribe to SVOD services is now nearly as high as the percentage who subscribed to traditional pay TV at the time of the DOJ’s original complaint.
Lightshed Partners also returned to its thesis that a Dish Network and DirecTV combination is necessary given the persistence of cord cutting.
“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,” wrote Lightshed analyst Rich Greenfield, who noted that the synergy opportunities of a satellite merger have declined over the years and DirecTV could be exposed to higher churn if it doesn’t renew its NFL Sunday Ticket deal.