Any inkling of a DirecTV-Dish Network merger is a non-starter until 5G networks reach more rural markets and expand consumer choices for linear and on-demand TV.
That’s according to the New York Post, which reported that antitrust officials at the U.S. Justice Department told AT&T executives they’re concerned that a merger between the two satellite providers might result in higher prices for rural communities without access to high-speed internet. It’s the same concerns that were raised by the DOJ when DirecTV and Dish were talking about a merger two years ago.
AT&T reportedly doesn’t want to wait through another DOJ antitrust review, especially since the results might not come out in its favor. Instead, the company is reportedly pushing ahead on a DirecTV sale without Dish involved.
MoffettNathanson wrote in a recent research note that Congress is likely to pump a lot of funding into infrastructure to help stimulate the economy, which will help connect many underserved Americans with broadband and could shrink Dish Network’s reliable rural video subscriber base by widening the addressable market for OTT services.
“Ironically, bringing broadband to more of rural America might actually make it easier to get regulatory approval for a Dish/DirecTV merger; recall that the biggest impediment to a merger in 2002 was the 2:1 nature of the combination in rural markets,” wrote analyst Craig Moffett. “But it would make a merger that much harder to finance. Without the defensible rural segment to fall back to, there would be no floor, and no future, for satellite TV.”
AT&T has reportedly received opening bids for DirecTV from several potential suitors and the valuation is less than the previously reported $20 billion for which the company had hoped. Current bids for the satellite provider are implying a valuation around $15.75 billion, less than a third of what AT&T originally paid for DirecTV.
In 2015, AT&T paid $48.5 billion for DirecTV and took on the company’s approximately $18 billion in net debt.