Thursday, March 27, 2014

If Comcast Can Do It, Then Why Can't Dish

The maturity of the cable industry, the rise of broadband streaming platforms, and the need for more cost efficiencies have led to Comcast pursing an acquisition of Time Warner Cable.  And if Comcast can do it, then why can't Dish.  That's the thinking of Dish Chairman Charlie Ergan to reach out to his competitor DirecTv to merge.  But while Comcast and Time Warner Cable don't compete given that they each oversee different markets, Dish and DirecTv compete 100% for satellite coverage.  Yet the rationale for the latter to merge makes complete sense.

The threat of wired and wireless cable, telco, and broadband carriage from businesses from Comcast to Verizon to Netflix are much more of a threat to business for Dish then competing with DirecTv.  As they lack an owned broadband platform, they are both much more at risk from future growth.  Combining businesses may not give them programming cost efficiencies, but it will give them technical ones. 

Still a Dish- DirecTv merger has no chance to move forward until the Comcast - Time Warner deal is fully vetted and approved.  Then a real case can be made for these two satellite behemoths to continue.  Ultimately though, as Ergan has correctly tried to do with his efforts with LightSquared, the satellite business needs a two-way broadband connection to position itself against cable and telco.  That is truly the means for getting a more competitive broadband landscape for consumers. 

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