Financial discussions about a potential merger between the two declining DTH operators over North America could be on again.
Indeed, those discussions have gone on for years and, despite changes in ownership of DirecTV and enthusiasm from Charlie Ergen, founder of EchoStar/Dish Network, all of this activity has come to naught. However, comments last week within Investor’s Business Daily (IBD) suggest that TPG (the former Texas Pacific Group), which now controls DirecTV, says that a merger could be re-visited.
IBD quotes a couple of reliable sources: First, TD Cowan analyst Gregory Williams saying that it might make sense sooner rather than later to optimize the synergies that a merger would enable. Williams adds that the recent agreement for AT&T to spend $23 billion for EchoStar spectrum means that EchoStar is now in a far better position to stand alone.
Another quote comes from a Deutsche Bank report which also says the $23 billion pending sale, plus pressure from the FCC for EchoStar to sell more of its retained spectrum “will lead to further actions by EchoStar that will unlock shareholder value and propel the stock higher in the coming months. These include additional spectrum sales and revisiting a Dish Network-DirecTV merger.”
Bizarrely, perhaps, EchoStar is doing well with its Boost Mobile business. Even though its mainstream Dish Network saw revenues continue to decline (Q2, down 6 percent to $3.725 billion), its Boost Mobile division added a net 212,000 subscribers and ended the quarter-year with some 7.36 million subs. And in dozens of major U.S. markets its 5G cellular service was voted the best for reliability and coverage.
In other words, perhaps Ergen is correct to focus on 5G. Boost’s growing 7.36 million subs is more than a match for EchoStar’s Dish declining 7.11 million subscribers. As part of the $23 billion spectrum deal, Boost will tap into AT&T’s own cellular networks under a wholesale, networks services agreement.
Investors have enjoyed a spectacular week with EchoStar’s (DISH) shares rising 8.5 percent on August 28th and a significant 107 percent during the week to $61.79 per share.
