The satellite-TV giants attempted a merger nearly two decades ago but the Federal Communications Commission and the Justice Department’s antitrust division stopped it. Two years ago, the United States Department of Justice also quietly warned executives off a prospective deal, concerned about the nascent rollout of 5G, sources told the newspaper.
According to the New York Post, insiders are now optimistic a Dish-Directv deal could pass regulatory muster as concerns about the market power of the struggling companies have waned. Some executives likewise argue that a merger could give a surprise boost to the United States’ troubled rollout of 5G wireless services.
Talks between the satellite-TV giants are being pushed forward by private-equity behemoth TPG Capital, according to sources close to the situation. TPG bought 30% of Directv from AT&T in a deal last February that gave the struggling company an enterprise value of US$16.25 billion. “TPG is driving the conversations. They want their investment back,” a familiar source told the New York Post.
However, Dish’s Chairman, Charlie Ergen, appears to be slow regarding the finalization of a deal, demanding significant voting shares and a say in key decisions in the combined company despite his minority position, according to the sources. “They are actively having conversations and trying to iron out the details,” a source added.
Ergen has long held that a deal is “inevitable and is just a timing issue, whether it is a decade or a day". Merging the two could result in US$1 billion in cost savings. And given the state of the satellite-TV market, “Ergen may have no choice but to get a deal done as both services continue to hemorrhage customers,” the report noted.