There has been much recent speculation that DIRECTV and EchoStar, the two main subscription satellite television services in the United States, could again be ready to merge.
Following a media conference at which DIRECTV chief executive Chase Carey and EchoStar chief executive Charlie Ergen both spoke, an LA Times article suggested that the EchoStar Dish Network could save $3 billion through a merger. This caused an analyst to upgrade its stock which served to drive up the share price to an annual high.
EchoStar previously attempted to buy DIRECTV when it was part of General Motors. At the time, News Corp lobbied against the bid and the Federal Communications Commission and the Justice Department was persuaded that such a deal was anticompetitive.
Since then, News Corp acquired a controlling stake in DIRECTV and the business logic of a merger now seems somewhat different.
Following major mergers in telecommunications companies, AT&T and Verizon are now beginning to engage in the television market that has been dominated by cable operators like Comcast and Time Warner.
Satellite, cable and telco operators are now more united in seeing each other as the competitive threat. A merger of the two competing satellite operators may now seem more acceptable. Between them, they have some 27 million subscribers.
Rupert Murdoch said in a recent television interview that in the increasingly competitive market “it would be much harder for the government to turn it down”.
The two satellite broadcasters are currently co-operating at many levels, including a bid for a wireless network, and some form of merger or acquisition should not be ruled out, although at the moment it seems little more than speculation.
The two satellite networks currently use different middleware platforms in their set-top boxes, and both have large legacy populations of devices. EchoStar uses OpenTV, which DIRECTV eschewed in adopting software from another News Corporation company, NDS.
A merger could ultimately raise the prospect of a single technical platform for satellite television in the United States, which would provide a more compelling competitor to cable, particularly if broadband and wireless are thrown into the mix.