Charlie Ergen’s dream of merging his Dish Network with AT&T’s DirecTV has been squashed by the Department of Justice — yet again, The Post has learned.
Regulators with the DOJ’s antitrust division recently informed executives of AT&T that a marriage between DirecTV and Dish would likely have to wait until faster 5G wireless service is more widely available in rural markets, two sources close to the situation said. Regulators remain concerned that a union could lead to higher prices in areas lacking high-speed Internet access, including tribal lands, these sources said.
The DOJ raised these same concerns two years ago and talks between the two companies fell apart. This time, AT&T is moving forward with an auction of DirecTV — just without Dish, sources said.
“A merger would be difficult,” a source with direct knowledge of AT&T’s talks with the DOJ told The Post.
The regulator could always change its mind but likely won’t as it delivered its assessment after having closely studied the broadband market while reviewing T-Mobile’s acquisition of Sprint last year, the source added.
AT&T, meanwhile, doesn’t want to wait around for a DOJ review only to be told no, especially after being forced to wait 20 months to close on its $85 billion merger with Time Warner.
“They have no desire to get in a protracted antitrust review after last year,” a second source explained.
A merger could help the rival TV satellite operators shore up their finances as they hemorrhage subscribers. But as The Post reported on Oct. 6, AT&T is moving forward without Dish despite lowball offers from private equity firms that range at about $16 billion — far lower than the telecom giant’s expectations for closer to $20 billion.
While that’s less than a third of the $49 billion that AT&T shelled out for DirecTV just five years ago, the satellite-TV company’s prospects are only projected to worsen as consumers continue to ditch cable for streaming services like Netflix, Hulu and Disney+.
Wall Street, of course, refuses to give up on a Dish/DirecTV deal. Analyst Walter Piecyk of Lightshed Partners argued in an Oct. 8 research note, for example, that a merger would save the two companies an estimated $1.5 billion a year “and perhaps even more” by allowing them to push for better rates from programmers, among other cost reductions.
Sources familiar with the DOJ’s talks with AT&T say the companies would have a much easier go of it in a few years when 5G service is more widespread. That would allow them to argue that merging would better allow them to compete against the growing streaming threat — including in their rural markets.
That might be just fine for Ergen, who made it clear that he’s willing to wait when two months ago reiterating his long-held belief that a marriage of the two companies is “inevitable.”
“Is it one month from now or two years from now? I don’t know,” he said during an August conference call.
AT&T and the DOJ declined to comment.
Share this article:
Source: Read Full Article