We are in the midst of what can only be considered as merger mania, a topic I covered in yesterday’s blog. One of the recently announced deals is the announcement that DirecTV is acquiring all video assets of EchoStar, which had just merged with Dish at the beginning of this year. This means that DirecTV will take on all of the Dish video customers along with Sling TV. As part of the merger, DirectTV is also taking on all of EchoStar’s debt.
This means several things for the industry. First, it means there will only be one satellite-based traditional video provider. DirecTV hasn’t said if it will continue to market under the Dish brand name, but the two satellite services will now be one. This will give the company the chance to consolidate and save costs. It also means that DirecTV will have a lot more cable customers and should have more leverage with programmers. Both DirecTV and Dish have been fighting with programmers to allow smaller video packages that people want. You might recall that DirecTV also currently serves the traditional AT&T cable customers.
The other interesting consequence of this is that it saves Charlie Ergen’s launch of Dish, the newest cellular company. Dish had been facing a $2 billion debt maturation next month, and many analysts predicted the company would have to enter bankruptcy. This gives Dish a clean balance sheet for the cellular business and provides the company with up to $5.5 billion in new debt headroom to complete the network and market its cellular services. The merger is not yet a done deal, and various creditors are being asked to take a haircut to help complete the transaction.
The press releases refer to the remaining Cellular company as EchoStar, and we’ll have to see if the cellular business keeps that brand name going forward.
It’s going to be interesting to watch Dish. The company spent $6 billion to meet its build-out commitments to the FCC. It’s estimated it will need a few billion more to meet the next coverage commitments in 2025.
Dish took a big chance on its original network design and pursued an open RAN architecture, which has the goal of using off-the-shelf generic hardware instead of the proprietary gear offered by the handful of industry vendors. The open RAN hardware has taken longer to perfect than hoped for, and the company ended up building a network that is a mix of open RAN and more traditional gear.
Dish has struggled. It acquired Boost Mobile and saw customers drop from 10 million to under 7.5 million. But the company seems poised to start attracting customers to it’s new 5G networks, which are likely wide open. I’ve been looking at the FCC cellular maps a lot lately, and I see Dish is in many markets like around my city, where it likely doesn’t yet have many customers.
It’s interesting how quickly the cellular industry has changed. The FCC required T-Mobile to support the launch of Dish as a term of T-Mobile’s merger with Sprint. At that time, just a few years ago, the FCC felt that the market would suffer without a replacement for Sprint. But since then, the big cable companies are aggressively selling cellular and migrating traffic to their own existing wireline networks. Other large ISPs and telcos other than AT&T and Verizon are exploring the cellular business plan as well.
One of the more interesting possibilities for Dish is to enter the fray in pursuit of FWA cellular broadband customers.