October 24, 2024
iStock.com/demaerre
What Does the DirecTV-Dish Network Merger Mean for Subscribers?
The face of pay-TV might look a lot different very soon. After years of rumors and speculation, the merger of DirecTV and Dish Network may become a reality, which is likely to significantly impact current subscribers.
Should government regulators approve the merger, DirecTV will buy Dish for $1, along with taking on billions of dollars in debt. Together, the new company would have almost 20 million customers. The deal saves Dish from potential bankruptcy, while DirecTV becomes bigger than pay-TV leaders Charter and Comcast.
A combined Dish Network and DirecTV will open the door to better negotiating power and improved positioning against programming providers, which could be either a win or a loss for subscribers. It should also help the company adjust to a declining customer base as more and more consumers cut the cord and turn to streaming services for entertainment.
Dish Network-DirecTV Merger Benefits
DirecTV and Dish Network could offer more attractive programming packages once merged. The company is now somewhat under the thumb of large programming providers such as Disney, which forces the satellite company to include channels many viewers are simply not interested in. With the new company becoming the biggest pay-TV provider in the U.S., it could demand better programming deals and offer smaller, more customized channels packages to subscribers.
A combined company might also offer a one-stop shop for content. Consumers could have access to different sources of entertainment without having to subscribe to multiple services. Satellite, streaming, and even music options could all be housed under one roof.
A Combined Company Downside
Taking the top spot in pay-TV providers, the balance of power would be tipped in DirecTV-Dish’s favor, allowing it to effectively control the market. The proposed new company with hardly any major competition could raise prices and take away choices. DirecTV-Dish could put undue pressure on TV networks to reduce programming costs, leaving them scrambling to meet the company’s demands.
Even though the merger has yet to officially happen, current customers of DirecTV are already looking at higher prices. As of Oct. 6, subscribers have to pay upward of $10 more per month depending on their current plan without adding any benefits. A new unchecked company could take it even further, with consumers eventually losing in the deal.
The long-term impact on customers will depend on how the new company navigates an ever-changing pay-TV landscape. With streaming platforms taking over the industry, a DirecTV-Dish Network will have to adapt through strategic partnerships and possibly even the development of original content. Whether subscribers get treated better or worse likely depends on the company’s success or failure moving into the future.
A potential merger of Dish Network and DirecTV is nothing new. The No. 1 and No. 2 satellite providers attempted to combine in 2002. Yet, antitrust issues came up, and a federal judge blocked the deal, fearing reduced competition would be detrimental to consumers. Should the current deal get approved, it should close before the end of 2025.
BrainTrust
Brad Halverson
Principal, Clearbrand CX
Richard Hernandez
Merchant Director
David Biernbaum
Founder & President, David Biernbaum & Associates LLC
Recent Discussions
Discussion Questions
In what ways could the evolving landscape of streaming services impact the newly merged DirecTV-Dish Network?
How might government regulators approach this merger differently than in 2002 when a similar deal was blocked?
What risks could arise from DirecTV and Dish Network merging and becoming the largest pay-TV provider in the U.S.?
Poll
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I think this means that Dish survives – something that was in doubt previously due to its very high debt levels. That’s good for subscribers. The bigger business may also have better negotiating power with content producers which could, ultimately, lower prices or provide for more flexibility around the packages offered to consumers. Content will also be better on a combined platform as it will incorporate live streaming and a digital library of content. Overall, I don’t see many downsides here.
25 years ago, both DirecTV and Dish were legitimate alternatives to CableTV. DirecTV had more premium options while Dish was the lower priced service. Now that streaming is strong and growing, these two need each other to compete. Their upside will be in negotiating with content providers in hopes of getting better carriage deals, thus improving margins. I doubt there is much here for the Feds to block as there are so many other options now.
The only thing that matters is I hope my costs go down some. I have DirectTV increase rates for some years now. i hope that rates will be come down as they will have more leverage to negotiate with the Disney’s of the world.
I hear you. And this is real thanks to a few content providers being aggressive on agreements. Back when I was in the industry, ESPN was the largest programmer expense (content providers) by a mile. Cable operators and satellite services were essentially hostage to pay whatever was demanded per agreements. Of course, Disney and some related channels are part of their fold. And these are simply past down to consumers.
The number of satellite TV options is about to shrink. All pay-TV operators are experiencing an existential crisis due to a trend of users cutting their cable services at an alarming rate.
The two companies will serve approximately 18 million customers together. That’s a staggering 63 percent drop from peak subscriber numbers in 2016.
In comparison, Charter and Comcast have roughly13 million subscribers.
Even with less competition in the satellite category, consumers will still have plenty of choices when considering countless streaming sources.
The combined satellite companies will have a lot of clout with Disney, and other powerhouses, and that will be positive for their customers.
This may help Dish in the short term, as it gives them better leverage with providers. But long term, this is a declining market with almost no growth potential. Consumers asked for ala carte TV options, now they have it with streaming. I don’t seem them going back.
So on point. I haven’t even thought about satellite TV for about 15 years. Declining market with no growth potential indeed!
The retail industry parallel that comes to mind is the Macy’s-May Company merger. The goal was to consolidate market share, gain negotiating leverage with vendors, and benefit from economies of scale. But the consolidation happened in a mature (and now declining) market segment.
Merging Dish and DirecTV may have similar short-term benefits, but the market for satellite and traditional cable TV is not growing. If anything, Charter and Comcast are better equipped to leverage growth in streaming through their internet businesses — so the post-merger prospects for DirectTV-Dish do not look very bright.
Agreed on Comcast and Charter. They are working hard to stem the customer loss with streaming options. They own the pipeline of course, which helps keep them inside the revenue stream. And they have also invested in some of the programmer content as well.
Government regulators should stay home on this one and let the market decide the value. There are too many choices available to even consider that this merger may be anti-competitive….I mean, think about it, the purchase price was $1, plus give us all that debt!
My take on this is we have regulators who need to find something productive to do. And besides, live sports is the ONLY thing keeping any cable/dish type offering going, and there are signs that people are losing interest there too (raise your hand if you are committed to staying up until midnight to watch that Yankees/Dodgers game…).
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I think this means that Dish survives – something that was in doubt previously due to its very high debt levels. That’s good for subscribers. The bigger business may also have better negotiating power with content producers which could, ultimately, lower prices or provide for more flexibility around the packages offered to consumers. Content will also be better on a combined platform as it will incorporate live streaming and a digital library of content. Overall, I don’t see many downsides here.
25 years ago, both DirecTV and Dish were legitimate alternatives to CableTV. DirecTV had more premium options while Dish was the lower priced service. Now that streaming is strong and growing, these two need each other to compete. Their upside will be in negotiating with content providers in hopes of getting better carriage deals, thus improving margins. I doubt there is much here for the Feds to block as there are so many other options now.
The only thing that matters is I hope my costs go down some. I have DirectTV increase rates for some years now. i hope that rates will be come down as they will have more leverage to negotiate with the Disney’s of the world.
I hear you. And this is real thanks to a few content providers being aggressive on agreements. Back when I was in the industry, ESPN was the largest programmer expense (content providers) by a mile. Cable operators and satellite services were essentially hostage to pay whatever was demanded per agreements. Of course, Disney and some related channels are part of their fold. And these are simply past down to consumers.
The number of satellite TV options is about to shrink. All pay-TV operators are experiencing an existential crisis due to a trend of users cutting their cable services at an alarming rate.
The two companies will serve approximately 18 million customers together. That’s a staggering 63 percent drop from peak subscriber numbers in 2016.
In comparison, Charter and Comcast have roughly13 million subscribers.
Even with less competition in the satellite category, consumers will still have plenty of choices when considering countless streaming sources.
The combined satellite companies will have a lot of clout with Disney, and other powerhouses, and that will be positive for their customers.
This may help Dish in the short term, as it gives them better leverage with providers. But long term, this is a declining market with almost no growth potential. Consumers asked for ala carte TV options, now they have it with streaming. I don’t seem them going back.
So on point. I haven’t even thought about satellite TV for about 15 years. Declining market with no growth potential indeed!
The retail industry parallel that comes to mind is the Macy’s-May Company merger. The goal was to consolidate market share, gain negotiating leverage with vendors, and benefit from economies of scale. But the consolidation happened in a mature (and now declining) market segment.
Merging Dish and DirecTV may have similar short-term benefits, but the market for satellite and traditional cable TV is not growing. If anything, Charter and Comcast are better equipped to leverage growth in streaming through their internet businesses — so the post-merger prospects for DirectTV-Dish do not look very bright.
Agreed on Comcast and Charter. They are working hard to stem the customer loss with streaming options. They own the pipeline of course, which helps keep them inside the revenue stream. And they have also invested in some of the programmer content as well.
Government regulators should stay home on this one and let the market decide the value. There are too many choices available to even consider that this merger may be anti-competitive….I mean, think about it, the purchase price was $1, plus give us all that debt!
My take on this is we have regulators who need to find something productive to do. And besides, live sports is the ONLY thing keeping any cable/dish type offering going, and there are signs that people are losing interest there too (raise your hand if you are committed to staying up until midnight to watch that Yankees/Dodgers game…).