Print media's well-publicized downturn may be a sign of things to come, but a recent story from the West Coast is proving there still is power in the pen. When EchoStar Communications' DISH Network closed trading yesterday up 6.17 percent ($32.52), some credited the upswing on an article in the LA Times hinting at rumors of a takeout of DISH by rival DirecTV.
The article said EchoStar CEO Charlie Ergen has been telling people at the Sun Valley Media Conference that a merger between the two satellite television companies would save DISH around $3 billion in expenses. The article also said DirecTV brass believes the regulatory environment to be more favorable for a merger than the last time the subject came up.
And with the FCC's seemingly-painless Adelphia approval, industry watchers agree that consolidation is in the air. Although it would still be difficult to get approval for the combination, Kaufman Bros.' Todd Mitchell said if a deal were coming down the pipe it would likely come sooner than later in order to get the process out of the way before the 2008 elections.
Wachovia's Jeffrey Wlodarczak added that DirecTV's CFO, Mike Palkovic has voiced the company's interest in DISH, and insiders feel their joint application for AWS spectrum being auctioned by the FCC supports the possibility of a merger. "We believe that a combined DISH and DTV entity would be worth more than the two companies as stand alones," he said.
"If a deal were to be announced, we think shares of both DTV and DISH would respond positively," Mitchell said.
Even if merger was a possibility, DTV would still have to use DN equipment and encryption until they replace it with their own. Which would cost mega bucks!
You are correct, IF a merger occurred, DTV would run DN in parallel until the next card swap or when they would have to swap equipment to go completely HD. Your talking years.