Dish Network: What’s next?

Having now firmly abandoned his attempt to secure more terrestrial wireless spectrum via Sprint/Nextel and Clearwire, Dish Network’s founder Charlie Ergen – never one to be idle – must be pondering his next chess move. It is worth remembering that it wasn’t so very long ago that Dish was pursuing wireless carrier T-Mobile’s assets in the USA, or selling out to AT&T. Then there are the near-constant rumours that Dish and DirecTV will cosy up together.

One highly regarded analyst, Craig Moffett, of Moffett Research, has little doubt as to what should be very high on Ergen’s agenda:  “By process of elimination, Dish is going to be dragged kicking and screaming into what was the best option from the beginning: a merger with DirecTV,” said Moffett.

Pairing these two huge operations together would make a huge amount of sense, and make Ergen even richer in the process (assuming DirecTV was the acquirer). The two DTH players would have a combined 34 million subscriber base. Out would go all those pesky expensive rights deals, and DirecTV could over time consolidate EchoStar’s satellite fleet into its own, and harmonise that aspect of the operation. Moreover, going forward, there could be one source of Ultra-HDTV investment. Ergen’s EchoStar sister business could even supply the boxes, complete with ‘Sling’ and ‘AutoHop’ functionality.

In May Ergen said on a conference call with analysts that “there would be tremendous synergies with DirecTV” but it would still be “the same company,” adding that a pure video business ultimately will be a “declining business” in the US. That’s a reasonable view, and reflects his attempts to move aggressively into wireless and its ease of supply VoD, OTT and a speedy return path to the head-end.

But there’s something compelling about a combined DirecTV/Dish, and the synergies would extend outside the Continental USA, and central and South America where the pair also have interests, and this region represents huge future opportunities.

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