AT&T Inc.’s DirecTV and Dish Network Corp., suffering the steepest subscriber losses in the pay-TV industry, are open to a merger and both companies believe such a deal could pass muster with U.S. regulators, according to people familiar with their thinking.
It’s been 17 years since a proposed combination of the two satellite-TV services was deemed bad for consumers and shot down by the Federal Communications Commission and the Justice Department. But today -- with at least seven competing cable-like packages offered online and the continued growth of streaming services like Netflix and Amazon Prime -- pay-TV subscribers are switching at increasing rates. DirecTV and Dish together lost almost 2.75 million subscribers in the past year.
Vanishing Subscribers
“Both companies are seeing substantial declines in customers and when that happens, you see management teams start making plans,” said John Hodulik, an analyst with UBS. “As we’ve seen in this industry, it has usually led to consolidation.” Hodulik wrote a research note Thursday outlining the benefits of a such a merger.
Representatives for Dish and AT&T declined to comment. The two companies have no active deal talks going on, according to the people, who asked not to be identified discussing internal matters. In a second merger try in 2014, Dish Chairman Charlie Ergen approached DirecTV. But AT&T swooped in weeks later and agreed to buy DirecTV for $48.5 billion.
Dish rose as much as 6.3% to $38.47, the biggest intraday increase since January, after Bloomberg reported the companies would consider combining their satellite-TV operations. AT&T gained 1%.
