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DirecTV-Dish Network Merger Speculation Rises

That didn’t take long. Just four years after buying DirecTV, AT&T appears to be sending signals that it is open to merging the satellite TV firm with its rival, Dish Network. At least, that seems to be the point of this Bloomberg story, which appeared just a day or two after longtime UBS telecom analyst John Hodulik wrote a report suggesting such a merger would make sense.

The logic isn’t hard to see: Satellite TV has been devastated by cord-cutting much more than cable services, which are insulated by their broadband businesses. Just in the first quarter, Dish lost 2.8% of its subscribers.

The Bloomberg story says there are no “active deal talks going on.” But the UBS report and the Bloomberg story may be trial balloons sent up by the companies to gauge antitrust regulators’ reaction to a deal. Regulators have blocked this combination before. But with the business in free fall, perhaps even antitrust regulators would see the wisdom of letting them combine forces and cut costs (although their reported opposition to T-Mobile and Sprint combining might argue against that way of thinking.)

For AT&T, UBS reportedly suggested it could end up with a minority stake in the combined company and get control of Dish’s wireless spectrum, benefiting its cellular business. If that’s true, it would be a rapid exit for AT&T—but getting out now would be better than sticking with a shrinking business.

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