NEW YORK (TheStreet) - The merger of satellite TV giants Dish Network (DISH - Get Report) and DirecTV (DTV - Get Report) would likely face more regulatory risks than Comcast's (CMCSA) recent $45 billion effort to buy Time Warner Cable (TWC). Still, there's a chance that Dish and DirecTV could decide the benefits of a marriage would outweigh the risk of going at it alone.
Bloomberg reported on Wednesday that Dish chairman Charlie Ergen recently approached DirecTV CEO Michael White about a possible merger. That interest comes over a decade after the Department of Justice blocked a $26 billion tie-up of the two satellite TV giants.
A possible new-found belief by Ergen that a merger is feasible makes sense in the context of a window of opportunity created in the shadow of Comcast and Time Warner Cable's merger efforts, and a web of consolidation that has run through the wireless business in the past 24 months.
It also indicates a quickly shifting environment for cable and satellite operators as consumers adopt new methods of viewing TV, sports and movie content. It was only a few years ago that Ergen said at a University of Colorado Law School presentation Dish's failed efforts to merge with DirecTV in the early 2000's could have destroyed the company.Now, as Bloomberg reported, he appears to be testing the waters of a merger. Ergen controls a significant chunk of Dish Network shares and has been lauded by investors for his savvy management of the company's purse strings. The Dish chairman was also early to spot a shift in communications habits in the U.S., buying up billions of dollars of wireless spectrum across the United States. Ergen stepped down from Dish's management ranks, in part, to help the company build up its wireless assets That experience now appears key to any possible merger effort between Dish and DirecTV. As analysts note, the synergies between Dish and DirecTV are immense, running as high as $30 billion in some models. A merger with DirecTV would also allow Ergen to finally deploy the billions he's spent on wireless spectrum, building out a nationwide wireless offering to bundle with satellite TV, a direct challenge to Verizon (VZ), AT&T (T) and Sprint (S). Dish, after all, emerged as a wild-card in SoftBank's efforts to buy Sprint, and presented a $25 billion takeover plan for Sprint that would have created a lightly leveraged competitor to cable and wireless giants.
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