BDB

News Corp. Talk Hikes Dish Stock


By Linda Moss & Mike Farrell multichannel.com 7/17/2006

EchoStar Communications’ stock rose Monday on speculation that Rupert Murdoch’s News Corp. was looking to acquire the second-largest direct-broadcast satellite provider and merge it with his DirecTV, the dominant player.

EchoStar, parent of Dish Network, saw its stock price hit a new 52-week high of $32.52 per share (up $1.89 each, or 6.2%) Monday, beating the previous mark of $32.41 per share.

The shares rose in the wake of a Los Angeles Times story on Herbert Allen’s Sun Valley, Idaho, media conference, which said rumors were swirling there that Murdoch was hatching a deal to buy Charlie Ergen’s EchoStar.

The Times quoted Ergen, EchoStar’s founder and CEO, as saying that such a merger “could save $3 billion in expenses,” while DirecTV CEO Chase Carey chimed in that the current regulatory environment might be more amenable than it has been in the past to a merger of the two DBS players.

EchoStar tried to buy DirecTV a few years back, but that deal was derailed in 2002 by the Federal Communications Commission. Ultimately, News Corp. stepped in, and it now owns 38% of DirecTV.

In a note Monday, Wachovia Securities analyst Jeffrey Wlodarczak wrote that the “takeout price” in any deal with be an issue, because “we would suspect that Ergen would want at the very least $40 per Dish share.”

Wlodarczak also wrote that he believes the regulatory hurdles to a DirecTV-EchoStar merger are still high, given the reasons why the FCC rejected EchoStar’s bid for DirecTV back in 2002.

“The main sticking point was that the market would have been reduced to two competitors in most markets, and to one competitor in millions of rural households,” he wrote. “The development of an RBOC [regional Bell operating company] video offering seems to have solved the former, but the latter [a monopoly in a material percentage of the 32 million U.S. rural households] is still likely an issue.”

Officials at News Corp. and DirecTV declined to comment Monday, and EchoStar couldn’t be reached for comment.

Wlodarczak wrote that a key argument for a Dish investment was a potential takeout or leveraged buyout of the company.

“We think DirecTV is a logical suitor, as well as a leveraged-buyout deal given CEO Ergen's 60% stake in Dish and low leverage,” he wrote. “We believe that a combined Dish and DirecTV entity would be worth more than the two companies as stand-alones based on various synergies that could be realized and the effective elimination of one competitor [especially in the United States -- 30 million rural households].”

http://www.multichannel.com/index.as...leid=CA6354056

Jeremy517

If DirecTV goes to the quality of Dish, fine. If vice-versa, not fine. DirecTV's picture quality just keeps getting worse and worse and I'd like to switch at some point.

Jimmy James

We're years from RBOC video all over the parts of the country with cable from what I have heard. Maybe they can get the OK to merge at that point, but I don't see it happening until then.

Deftones

Interesting...I'll take DirecTV hardware and Dish PQ please...

Chew

Ehhh. I'm not so sure about that. I've not actually used the new DirecTV DVR, but I've heard it sucks (and the forthcoming HD DVR uses the same software). Dish has the edge in both categories, it seems.

raven56706

the only thing keeping me on directv is freaking NFL SUNDAY TICKET.... if comcast had sunday ticket, i would go to comcast.

SleepyW

If DISH buying DirecTV was nixed because it would be a monopoly, how could DirecTV buy DISH? It would be even MORE of a monopoly because of Murdoch's interest in other media outlets.

Deftones

Speaking only about Tivo right now. From what I've seen w/ Dish hardware, the interfaces are clunky and slow.

BDB

I don't think Ergen has anywhere near the power of Murdoch. that'll be the difference.
Plus with Fios coming online folks now have more options.

Jimmy James

How many people have more options right now with Fios? It can't be that many.

You're dead on about the pull issue, though. It looks like Ergen is fine with it, but I'd be super pissed if I were in his shoes if this works out. Okay, I'd probably be happy with the big money just like he is. It still isn't right in terms of principle.

Pistol Pete

Good freakin' luck getting regulatory approval for this merger. Not a chance...

Jeremy517

I live in a fairly small town outside of Portland, and Verizon has marked up our stereets for FIOS. If we can get it, it must be becoming more widespread.

Jimmy James

I just grabbed a projection from last year that indicates 6 million homes will have RBOC video by 2010.

http://www.multichannel.com/article/...isplay=Finance

GIjon213

I just hope that if this does happen, one would be able to get rid of XM on DTV and get Sirius instead.

raven56706

sirius on directv would be

Red Dog

FIOS penetration (particularly on the TV end) is very small.

No way regulators will approve this.