Dish Network president Charlie Ergen said a possible merger with DirecTV was “inevitable” after calling many analysts. Market watchers say the prospect of merging the two pay-TV players will become more likely if satellite TV’s share price continues to fall amid fears of inflation and recession.
Jeffrey Wlodarczak, an analyst at Pivotal Research Group, sees growth potential in Dish’s planned $10 billion 5G wireless network, and what he agrees is the inevitable merger with DirecTV. “I think a weakened economy could certainly put pressure on the parties to reach an agreement, as that could accelerate the decline of traditional pay TV,” Wlodarczak said. hollywood reporter.
On Wednesday, Dish shares continued to decline late, dropping $4.29 or nearly 20% to close at $17.46.
Significant synergy as a result of the merger is still available, Wlodarchak added, noting that regulators who previously suspended the Dish/DirecTV combination due to antitrust concerns could pursue a transaction that would ensure the continuation of pay television in rural America.
The problem is, for rural Americans, more TV viewing options mean that Dish’s customer overhead is increasing, further undermining the future of the satellite TV player and reducing the appeal of the DirecTV merger.
Craig Moffett, an analyst at MoffettNathanson, sees that the Dish/DirecTV merger will certainly reduce the cost of signing up new users. Attempts to recruit subscribers are becoming more stringent. “Unfortunately, with such low gross additives, there isn’t much opportunity for synergy here,” Moffett said in a May 6 commentary to investors about a potential satellite TV merger.
The impetus for renewed merger talks comes as traditional satellite TV players lose even more customers to streaming platforms, just as Ergen’s Dish facilitates the expansion of its wireless network. On May 6, Dish reported a loss of 462,000 net pay-TV subscribers in the first quarter, down from 10.2 million a year earlier.
The loss at Sling TV was even greater as total subscribers dropped to 2.2 million in the quarter, down from 2.5 million a year ago. Dish Chief Executive W. Erik Carlson told analysts during the first-quarter earnings call that subscriber losses have increased since the end of the football season, “but the bottom line is that we haven’t reached the level we had hoped for.” “.
Dish’s CEO’s challenge, as investors see the market slump and a sudden focus on customer growth after Netflix announces customer losses, will be to find Wall Street prizes for a time-consuming 5G wireless network and an investment. significant.
“Now it’s time for the execution (where, of course, the death penalty was quite fascinating), while of course the profits are still on the horizon. “We continue to support Dish as part of our LT concept,” said Gregory Williams, an analyst at Cowen, in a May 11 investor post.
Deutsche Bank analyst Brian Kraft is also patient with plans to build Dish’s wireless network, even as its traditional satellite TV business struggles. “We are repeating our buy rating, but lowering our PT to $61 (from $67 previously) due to our now lower priced retail and wireless TVs projections, along with higher estimated debt, reflecting the current environment and expansion of interest rates. About Dish credit spreads,” Kraft said in a May 8 commentary to investors.
Source: Hollywood Reporter
Camila Luna is a writer at Gossipify, where she covers the latest movies and television series. With a passion for all things entertainment, Camila brings her unique perspective to her writing and offers readers an inside look at the industry. Camila is a graduate from the University of California, Los Angeles (UCLA) with a degree in English and is also a avid movie watcher.
