Friday, June 14, 2013

Dish Wants Wireless Distribution, DirecTV Wants Content

In the game of Who'd You Rather, the question to Dish Network would be who do you want more, Sprint or Clearwire.  While Dish's intention is clear, it seems to me the answer is both. Having the Sprint infrastructure along with additional wireless capacity from Clearwire would certainly help Dish to compete for wireless/streaming customers.  And SoftBank, the other pursuer of Sprint, sees it that way too.  And while Sprint is backing Softbank, Clearwire is backing Dish.  According to Bloomberg, "Ergen, the chairman and co-founder of the satellite-TV company, is angling for both Clearwire and Sprint as part of a plan to expand into wireless services."  And perhaps by controlling the wireless spectrum piece, Dish makes a Sprint deal less attractive for Softbank.

While Dish is angling for the wireless platform, DirecTv wants more content.  And they can achieve that by acquiring Hulu.  "Several sources with knowledge of the ongoing Hulu acquisition talks tell PandoDaily that a deal is imminent and that DirecTV is the likely victor."  Certainly, that acquisition has the potential of providing DirecTV with revenue streams from both subscription and advertising.  But it has pitfalls too as the current owners who are the content makers could limit the content that Hulu has been receiving.  Cable operators are writing agreements that potentially limit how networks can distribute their content outside the cable platform.  That can severely hurt companies like Hulu that rely on gaining access to these series. 

And so we have two different satellite companies taking different strategies to improve their overall business model.  And in the long run, that might be most beneficial should these two companies ever partner together to compete more effectively against cable and telco operators.  Because as far as the industry is concerned, size matters and consolidation is key.