Cord-cutting started as a trend, but at this point is more akin to a movement than anything else. The proliferation of streaming services like Netflix, Amazon Prime and more have replaced the traditional cable package for the majority of Americans. As a result, those more traditional broadcasting companies are looking for innovative ways to stay afloat. That’s likely what led DISH co-founder and chairman, Charlie Ergen, to call a merger between DISH Network and its largest satellite rival DirecTV, “inevitable”.
This news comes on the heels of DISH reporting their fourth quarter results, which saw a loss of 100,000 satellite TV subscribers, in addition to losing roughly 94,000 Sling TV subscribers. Optimists will point out that those numbers are better than the previous year, but the truth is it’s not a good sign.
DISH is betting a significant portion of its future on the outcome of the T-Mobile and Sprint merger. Since that merger looks to be going through, DISH is going to become the fourth largest wireless carrier in the United States in the very near future.
It’s going to take DISH years to build but the infrastructure it needs for a 5G wireless network, which means the company needs to keep it’s television services as profitable as possible. Those circumstances make it easy to see why a merger between DISH and DirecTV might look appealing to both companies.
Ergen acknowledges that a merger between his company and DirecTV would not be without its challenges. Given the fact that the two companies make up most of the satellite TV industry, the merger would likely face the same monopoly scrutiny that the T-Mobile and Sprint merger has found itself up against.
In fact, those who follow the space will remember that DISH Network and DirecTV were already banned from merging back in 2002 over concerns surrounding the elimination of competition in the market.
Ergen went on to comment about the current state of the television industry and how companies like DISH Network have to adapt if they want to stay competitive. “The growth in TV is not coming from linear TV providers, but from huge programmers,” said Ergen. “You just can’t swim upstream against a real tide of big players.”
DISH has its hands full becoming a wireless carrier at the moment, but that in no way means that a merger between DISH and DirecTV is off the table. It will be interesting to see what these satellite providers do to stay innovative in an age of streaming services.
