DirecTV's Run Looks Over

In an effort to compete, DirecTV has formed partnerships with phone companies such as Verizon (VZ Quote) and Qwest (Q Quote) to combine service offerings.

Investors have speculated that larger deals could be in the works to strengthen the company's competitive position, such as a merger between DirecTV and DISH or an alliance between DirecTV and AT&T (T Quote), but some say such deals are unlikely because the current political climate is less welcoming toward mergers of big rivals.

"It will never happen because it doesn't work from an antitrust perspective," says Kaufman Bros. analyst Todd Mitchell about the prospect of a merger between the two satellite operators. "From a political perspective, rural America is disproportionately powerful. If you think Democrats are going to let Rupert Murdoch or John Malone get control of what amounts to the only multichannel television offering in Red State America, you've got another think coming.

"Murdoch floated the idea and rapidly discovered that the Bush Administration had lost its power and the Republican Congress had lost its discipline, and there was no way he could get it done," adds Mitchell. "That's probably why he was willing to get rid of the asset."

To be sure, Murdoch had his own reasons for dealing DirecTV to Malone. He sold his company's 38.5% stake in the company in return for Malone's 16.3% stake in News Corp., which was viewed as the only threat to Murdoch's grip on the media empire he created. With Malone out of the picture, Murdoch can now drop News Corp.'s so-called poison pill policy that the company adopted as a takeover defense when Malone accumulated his stake two years ago.