With the looming threat of the Time-Warner/Comcast merger, it’s no wonder that the other big cable providers are looking for their own ways to expand. According to the Wall Street Journal, DirectTV is entertaining purchase and merger offers from AT&T and Dish Network.
The deal would potentially be even bigger than the TWC merger, with DirecTV worth about $40 billion on paper. Add to that the value of virtually unlimited expansion, and it starts to become clear why these players are so interested.
Verizon, which has existing deals with DirectTV to service packages for their DSL and dial-up customers, is not reported to be in the game. This is likely because Verizon acquired Intel’s aborted attempt at creating an Internet-based cable service last year. Verizon, unlike Intel, already possesses carriage agreements with the networks, so when they do launch, they’re likely to be more successful than Intel or Apple were in their efforts.
Satellite television is popular in rural areas where cable companies are loathe to string cable, and in recent years, wireless companies like AT&T have been beefing up their cell towers to sell wireless Internet to these people (at the kind of high prices you enjoy on your phone, for not that much more data). These plans may have something to do with the consistent rejection of the Obama administration’s desire to Eisenhower the Internet by sponsoring fiber runs to small communities. Either way, I maintain the opinion that when you’re dealing with companies as enormous as all the players in this game, mergers and acquisitions always lead to higher prices, less choice, and no competition. At least if Dish is the buyer, instead of AT&T, they can repurpose satellites with more channels and better coverage in the sky. Still, I’m not holding my breath for that one to turn out well either.