Does Dish Network Want to Merge with DIRECTV?

In 2014, Dish Network (NASDAQ:DISH) explored merging with DIRECTV. However, the deal never happened since DIRECTV sold itself to AT&T (NYSE:T). The AT&T deal valued DIRECTV at $65 billion, which valued it at $67.1 billion including debt. Both companies sell satellite television subscriptions.

When the company closed the purchase of DIRECTV, AT&T CEO Randall Stephenson said, “We’re now a fundamentally different company with a diversified set of capabilities and businesses that set us apart from the competition.”

Dish and DIRECTV are struggling

AT&T had high hopes to grow its satellite television business with DIRECTV. When AT&T purchased the company, DirecTV had nearly 40 million customers across the US and Latin America. However, the company has been losing customers as cord-cutting shrinks the traditional pay-TV market. For example, AT&T recorded a loss of more than 3.4 million pay-TV customers in 2019. Dish faces a similar problem. The company shed 511,000 satellite television subscribers in 2019.

Dish chairman discussed the merger

Six years down the road, there are still thoughts that Dish and DIRECTV would make a perfect match. During Dish’s fourth-quarter earnings call on February 19, Dish Chairman Charlie Ergen said that merging with DIRECTV is inevitable. Ergen made the comment when he discussed the challenges facing traditional pay-TV providers. Dish is making a move into the wireless market to cope with the shrinking pay-TV market.

AT&T might drop DIRECTV as customer losses continue

AT&T has faced pressure from activist investor Elliott Management to sell DIRECTV. While AT&T hasn’t openly talked about divesting DIRECTV, executives have hinted that they might drop the business down the road.

Last year, AT&T COO John Stankey told Reuters that the company didn’t purchase DIRECTV due to its satellite television business. Instead, he said that AT&T bought the company for its big customer base. AT&T thought that it could migrate DIRECTV customers to its video streaming services. The company has launched several video streaming services since it purchased DIRECTV. AT&T plans to launch another video streaming service, HBO Max, this spring.

In October 2019, Stephenson said that DIRECTV would be an important piece of AT&T’s strategy for the next three years. We don’t know what AT&T plans to do with DIRECTV after three years. However, the company has been selling its non-core assets to raise funds and reduce its massive debt. If AT&T sells DIRECTV, it would create an opportunity for the business to merge with Dish.