A report from Standard & Poors Market Intelligence (S&P) by Sarah Barry-James suggests that the potential for some sort of ‘merger’ between AT&T’s DirecTV and Charlie Ergen’s Dish Network poses risks.
Ergen is on the record as saying that a combination of the two DTH pay-TV giants is “inevitable”. But S&P reminds readers that Constantine Cannon, a legal firm which specialises in antitrust litigation, says that much has changed in the video market since 2002 when federal regulators said no to a previous merger scheme between DirecTV and Dish.
Constantine Cannon suggests that regulators would still likely rule a merger out. The lawyers say that there are millions of Americans who remain unpassed by cable and for whom satellite video is their only pay-TV option. Under Section 7 of the Clayton Act, any merger that is likely to substantially lessen competition “in any section of the country” is anticompetitive and can thus be blocked.
The S&P article admits that finding a precise number of homes unpassed by cable is difficult but depends on the various sources which suggest that some 90 per cent of US homes now have high-speed internet available, and thus leaving a market of 10 per cent without.
There’s another key element in any decision to permit a monopoly to be created, and it assumes the two players seeking to merge are near “death’s door” and in a state of near bankruptcy. While DirecTV is not in the rosiest of health it is far from bankrupt. Same with Ergen.
However, there are some precedents, not least the merger between Sirius and XM Radio back in 2008. That merger was a 17-month roller-coaster of a period for the pair with no guarantee that the authorities would allow the merger. Maybe that’s the sort of timetable AT&T (and Ergen) might be seeking.