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Satellite Merger?

October 17, 2007 | Author: Ibex Marketing

Liberty Media is the owner of the QVC cable shopping newtork and and Starz movie channels, among others. Last year, it made a deal with Rupert Murdoch’s News Corp. to trade for a controlling interest in the satellite television service, DirecTV. Now a number of sources, including analysts Probe Financial Associates, are musing about the possibility of a DirecTV merger with EchoStar, which runs the DISH Network satellite television service.

The idea of this merger was floated back in 2002, but was considered then to be in conflict with anti-trust laws. The situation as changed, however, as the question of monopolies is now considered in the broader market context. As a result, a single satellite company would be less likely to be judged a monopoly, because it has to compete in the same market as the cable and telephone companies that are also offering television service. Similar reasoning is at work in the possible merger of the Sirius and XM satellite radio services.

A merger between DirecTV and EchoStar would make a lot of sense, especially now that EchoStar has bought SlingBox. It presumably would result in a more efficient operation. The problem facing any satellite service, however, is how to compete with the cable and telco “triple play” offerings that include broadband Internet service. A larger, combined DirecTV/EchoStar might have the clout needed to make some favorable alliances with broadband providers.

The Liberty Media CEO, Greg Maffei, has stated that such a merger is unlikely. Still, that doesn’t mean it won’t happen.

You can see the differences between DirecTV and DISH Network offerings at