Shares of Dish Network parent EchoStar and DirecTV parent AT&T climbed over 7% and more than 2%, respectively, on Monday following reports that the satellite TV giants are in talks about a potential merger.
The discussions, which are in the early stages according to Bloomberg and Reuters, could potentially lead to a combined company with around 20 million subscribers. It comes at a time when the pay-TV industry is bleeding video customers who are cutting the cord for streaming. Bloomberg Intelligence estimates that the pay-TV industry has lost nearly 30 million users between 2015 and 2023 — and could lose another 6 million by the end of 2024.
DirecTV, which is a private company owned by AT&T and private equity firm TPG, had an estimated 11.3 million subscribers as of the end of 2023, according to Leichtman Research Group. Meanwhile, EchoStar reported a total of 8.07 million pay-TV subscribers as of the second quarter of 2024, including 6.07 million Dish TV subscribers and 2 million Sling TV subscribers.
“Rumors about a potential transaction involving DIRECTV and Dish are nothing new, but we don’t comment on rumors and speculation,” a spokesperson for DirecTV told TheWrap.
Representatives for AT&T also declined to comment, while representatives for Dish/EchoStar did not immediately return TheWrap’s request for comment.
The two companies have held on-and-off talks about a possible combination in the years since the Justice Department sued to block the two parties’ first attempt at a merger back in 2002. EchoStar closed its acquisition of Dish late last year.
“It’s hard to argue that a merger shouldn’t happen; it clearly should. Consolidation during a period of secular decline is always to be expected,” MoffetNathanson analyst Craig Moffett said in a note to clients. “But it would be a mistake to overestimate its importance. Adding a year or so to the expected life of satellite TV isn’t going to change the narrative for programmers, distributors, or even for satellite TV.”
Moffett said the firm remains skeptical about “pick-and-choose synergies” in programming agreements, noting that this merger has been anticipated for decades and that protections for affiliates are likely already anticipated in carriage agreements.
It also comes as DirecTV recently struck a new carriage deal in principle with Disney, which ended a 13-day blackout of the latter’s linear networks ABC and ESPN. The deal includes continued carriage at market-based terms of ABC-owned stations, the ESPN networks, the Disney-branded channels, Freeform, the FX networks and the National Geographic channels.
It also includes the opportunity to offer genre-specific package options, such as sports, entertainment and kids/family — inclusive of Disney’s linear networks along with streaming services Disney+, Hulu and ESPN+. The streaming options will be included in select DirecTV packages under a wholesale agreement and will also be made available on an a la carte basis. The pact provides the rights to distribute the ESPN flagship streaming service at no additional cost to DirecTV subscribers following its launch in 2025.
“We believe a combination of DirecTV and DISH would provide substantially greater leverage to drive down minimum penetration rates,” LightShed Partners analyst Rich Greenfield added. “Remember, without FAR lower, minimum penetration rates, only a subset of subscribers can take smaller bundles from MVPD/vMVPDs before all channels need to be paid for regardless of whether they are offered in a particular bundle.”
The post EchoStar, AT&T Stocks Jump on DirecTV-Dish Merger Talk Reports appeared first on TheWrap .
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