Is bigger telco deal in DirecTV's future?

DirecTV, the satellite TV provider that  has become a key partner to the three largest telcos in the U.S., among others, is now undergoing a merger with Liberty Entertainment that reportedly will make it easier for DirecTV to be potentially acquired by one of those telco partners.

The merger is actually a pretty complicated deal in itself, and I'll refer you to The Financial Times rather than trying to explain it here. The more significant aspect of this news from a telco TV perspective is how DirecTV's apparent "end game" (stated clearly as such by one of its investors in the Financial Times story) could affect the landscape for cable TV, telco TV, IPTV, satellite TV and any other classification that might apply.

Purely from a competitive point of view, DirecTV has a pretty good thing going now that it has landed the three largest U.S. telcos (AT&T being the most recent) as resale partners. Getting bought by one of those service providers certainly would deliver a pay-off to DirecTV/Liberty investors, backers and controllers such as John Malone (remember him?), but wouldn't it ruin DirecTV's other resale partnerships? Would such a deal send its other telco partners back to Dish Network to fulfill their satellite TV needs? Would DirecTV being acquired also put Dish in play for possible telco acquisition, and what could that, in turn, mean for many independent telcos who rely on partnerships with Dish? What might a telco-controlled DirecTV mean for the ongoing cable-telco battle?

I used to think telco-satellite TV resale arrangements had a short shelf life. It seemed to me that if IPTV was the real end game for telcos, or even if over-the-top video strategies became wildly successful, then satellite TV was merely a transition play that would become less significant as telcos eventually moved customers to triple-play bundles featuring IPTV, VoIP and Internet over their broadband pipes. More recently, that has seemed less likely to happen, as satellite TV has continued to be a major piece of the telco bundle, as well as a successful standalone service, which telcos promote a bit more loudly than they once did.

If a telco--AT&T, just for the sake of example--were to buy DirecTV, that deal would make one telco the single-largest threat to the increasingly shaky market dominance of traditional cable TV. In regard to IPTV specifically, could acquiring a satellite player effectively decrease the importance of IPTV for that particular telco? If so, the move could have a significant ripple effect in the vendor portion of the IPTV ecosystem. And because the majority of telco TV customers these days are actually watching satellite TV, it could radically change the market dynamics among telcos, too, as they consider whether or not they want to resell satellite TV offerings owned by another telco.

-Dan 

For more:
- The Financial Times has this story 

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