# Rupert wants to buy Dish



## aktick (Jun 17, 2004)

http://www.multichannel.com/index.asp?layout=articlePrint&articleid=CA6354056

News Corp. Talk Hikes Dish Stock
By Linda Moss & Mike Farrell 7/17/2006 5:30:00 PM

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 declined to 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].


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## minorthr (Nov 24, 2001)

Echostar buying D* didnt get approved by the FCC, so why would they think D* buying E* would get approved.


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## Enrique (May 15, 2006)

minorthr said:


> Echostar buying D* didnt get approved by the FCC, so why would they think D* buying E* would get approved.


i was looking at this:
1. Better Politics
The FCC's decision to reject the earlier EchoStar-DIRECTV deal was based in part on EchoStar's clumsy handling of the case. Led by Charlie Ergen, its irascible and always unpredictable CEO, EchoStar alienated key FCC members and staffers by repeatedly failing to submit key documents on time. The company also did a poor job of lobbying both FCC officials and congressional lawmakers.

Now led by the powerful and savvy News Corp. (and its omnipotent chairman, Rupert Murdoch), DIRECTV would not make the same mistake.

2. Better Lobbying
Four years ago, Murdoch's News Corp. launched a massive (and effective) lobbying campaign to block the EchoStar-DIRECTV deal.

Why?

Murdoch wanted to buy DIRECTV himself.

So, using his considerable influence in Washington, Murdoch helped orchestrate the deal's demise. (After the merger fell through, News Corp. purchased a controlling interest in the satellite TV service.)

If DIRECTV decided to buy EchoStar, Murdoch's D.C. connections -- and money -- could perhaps get the deal approved.

3. More Competition
With the launch of new TV services from telcos Verizon and AT&T, News Corp. could argue that competition within the satellite category is not as important as it was four years ago. In some cities, viewers can now choose from three TV providers -- cable, satellite and telephone.

http://www.tvpredictions.com/satmerger071706.htm


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## Lee L (Oct 1, 2003)

Well, I guess they think that maybe they have more of a case that the competition is there with Verizon's Fios and ATT Uverse as well as Bellsouth starting to offer TV in addition to the cable that is there already. Also, they probably think that maybe the government entities that review the deal are going to be more lienient.

EDIT: Enrique elaborated my point better and much more quickly than I did. 

Personally, I think the deal makes sense on many levels as far as non-duplication of assets. However, it would have made one heck of a lot more sense several years ago before the current infrastructure became so entrenched. The costs to convert over are going to be immense and we can probably say goodbye to any innovation for a 1-2 year period while they are working this out and waiting for the deal to be approved.

Teh same thing happened while they were talking last time and it delayed all kinds of stuff and took both D* and E* a year to get new products back in teh pipeline.


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## newsposter (Aug 18, 2002)

never, it would mean more HD for us DTV users. Nothing that good can happen to us. So no, bookmark this post. It wont happen anytime soon.


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## Adam1115 (Dec 15, 2003)

Oh god, not this again... 

What possible advantage could they argue for consumers?? Less competition was on reason it got denied before, some areas only have satellite as a choice. Others have very little competition from cable... 

They argued that they could never do LIL without a merger, and both companies did it easily. Now their probably going to argue HD-LIL, but give me a break. There is no good reason for this to get approved. More competition=good thing. Less Competition=bad thing.


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## Mark W (Dec 6, 2001)

I hope this talk goes away quickly. Competition is good. If the merger went through in 2002, we would be behind where we are now.


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## Matt9876 (Sep 1, 2001)

I said this last time "Competition is good for the consumer" 
No way should the FCC let them merge into one company. 

DirecTV now has a 40 channel package, do you think that would have ever happened if Dish didn't offer one first?


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## ebonovic (Jul 24, 2001)

But the playing field has changed a lot in 4 years.

Cable Co's are now much more a competitor then they where 4 years ago
FIOS/IPTV are serious ... SBC/ATT has been advertising like crazy in Illinois over the last couple months.

All the new subdivisions by us are being pre-wired with Broadband-Cable ready...

You are looking at Dish and DirecTV which now have what... 9-12 SAT "slots" and probably 20 or so SATs up there...

If they could combine those resources alone, could you imagine some of the services we could get?

The competition is there in the major markets (or will be within the next 12-24 months)

The hard part is that "rural" area argument....


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## Lee L (Oct 1, 2003)

ebonovic said:


> The hard part is that "rural" area argument....


Well, they countered that last time by saying that they would put national pricing into place so that everyone paid the same thing regardless of the level of competition. Best case scenario, this means that everyone in the country gets the benefits of the most competitive market in teh country. One issue with that was Pegasus since they had extra costs built in, but now Pegasus is gone so that should not be an issue.


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## aktick (Jun 17, 2004)

ebonovic said:


> The hard part is that "rural" area argument....


FWIW, I'm as rural as it gets in the midwest (about 15 miles from the nearest city - and that's population 10k), and I get 3 mbps DSL. I'm guessing the infrastructure for this new super-duper-high speed FIOS or whatever is completely different, but the fact that we can get that fast of DSL way out in the sticks shows that a lot of progress has been made.

I'm somewhat indifferent to a merger. If it happened, I don't think I'd be hurt much (if any) price-wise, and the programming would probably be better overall, but I would fear they wouldn't have much incentive to improve the hardware technology.


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## ebonovic (Jul 24, 2001)

aktick said:


> FWIW, I'm as rural as it gets in the midwest (about 15 miles from the nearest city - and that's population 10k), and I get 3 mbps DSL. I'm guessing the infrastructure for this new super-duper-high speed FIOS or whatever is completely different, but the fact that we can get that fast of DSL way out in the sticks shows that a lot of progress has been made.
> 
> I'm somewhat indifferent to a merger. If it happened, I don't think I'd be hurt much (if any) price-wise, and the programming would probably be better overall, but I would fear they wouldn't have much incentive to improve the hardware technology.


Cool.....

"Rural" is such a grey area... 
As the "technology" curve is so different in different "parts" of what is defined as rural...

FIOS is based on fiber, but... if you are getting 3mbps DSL... they should be able to get you something.

I just think there are enough factors that have changed in 4 years... one major player changed.... that you can use what happened in 2001-2002 as a basis of comparison, but it is an entirely new ballgame.


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## Adam1115 (Dec 15, 2003)

ebonovic said:


> But the playing field has changed a lot in 4 years.
> 
> Cable Co's are now much more a competitor then they where 4 years ago
> FIOS/IPTV are serious ... SBC/ATT has been advertising like crazy in Illinois over the last couple months.
> ...


But how on earth are they going to combine resources? They would have to replace 10 million STB's. It's just not going to happen, it would cost way to much...


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## cowboys2002 (Jun 15, 2001)

Well..charging a lease upgrade fee and providing a rebate to the account, while requiring a service commitment may do it!!!


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## ping (Oct 3, 2005)

Adam1115 said:


> But how on earth are they going to combine resources? They would have to replace 10 million STB's. It's just not going to happen, it would cost way to much...


If they save $3 billion per year by doing it (Ergen's words, not mine), then 10 million STBs is nothing.


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## Adam1115 (Dec 15, 2003)

cowboys2002 said:


> Well..charging a lease upgrade fee and providing a rebate to the account, while requiring a service commitment may do it!!!


That won't pay for 10 million set to boxes. a $50 subsidy would cost them a half billion dollars, not even getting into the logistics of ramping up production to that level in a short period of time...


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## NealO (Aug 10, 2005)

aktick said:


> FWIW, I'm as rural as it gets in the midwest (about 15 miles from the nearest city - and that's population 10k)


LOL- I live 8 miles from the nearest town... population 290.

I think (and hope) this buyout/merger will go through. The current regulatory environment seems to be very cooperative with mega-merger requests. Plus, I think DTV/DSH can make a good case that they need to combine in order to compete with the mega-cable co mergers recently approved.

Personally, I'd like to see them be able to remove the redundancy and improve picture quality.


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## aktick (Jun 17, 2004)

NealO said:


> LOL- I live 8 miles from the nearest town... population 290.


OK isn't the midwest.


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## newsposter (Aug 18, 2002)

how does the dtv/tivo deal and dish's loss come into play in any of this?


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## Lee L (Oct 1, 2003)

Adam1115 said:


> But how on earth are they going to combine resources? They would have to replace 10 million STB's. It's just not going to happen, it would cost way to much...


Tha plan last time was to take something like $2 billion as a charge to upgrade boxes. Even then it would be very gradual and would mostly consist of all new boxes being compatible with the new, combined system, followed shortly by or in conjuntion with replacing all the HD boxes and then a gradual upgrade of all the rest of the boxes. It was somethign like 7 or 8 years before they would be ina position to change over all the standard def stuff, but after a year or 2 as HD was added, they would be good to go on a totally combined system.

Of course as time goes by this whole situation gets worse and worse as both D* and E* add more customers and installed boxes.


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## dswallow (Dec 3, 2000)

ebonovic said:


> But the playing field has changed a lot in 4 years.
> 
> Cable Co's are now much more a competitor then they where 4 years ago
> FIOS/IPTV are serious ... SBC/ATT has been advertising like crazy in Illinois over the last couple months.
> ...


And two inept software development teams has gotta be better than one, right?

No, the merger would be bad; if simply for competitive reasons. DirecTV has no need for additional satellite locations. What they have now, including the Ka-band launches in 2007 is sufficient to provide everything. And it does so in an orderly way, too --- surrounding a narrow range in the sky.


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## austinsho (Oct 21, 2001)

Someone name ONE time in history when a monopoly in any business has been a good thing for consumers.

And don't tell me that cable companies will provide competition. All this does is reduce the level of competition. You'll have two cable companies....one with a wire, one with a dish, *both* with a "eff" you attitude.

Jeez....it's nightmare time, folks.


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## untouchable (Apr 13, 2005)

Matt9876 said:


> I said this last time "Competition is good for the consumer"
> No way should the FCC let them merge into one company.
> 
> DirecTV now has a 40 channel package, do you think that would have ever happened if Dish didn't offer one first?


Recent FCC regulations forced them both to offer a "Family" package..that's why it's there now, not to compete with DISH. I think the merger would be a great thing from a business stand point. If Rupert wants Echostar or DISH, he will get it.


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## DTVPro (Jun 24, 2005)

people in here are just pissy because it would remove the tried and true "I think I'm going to dish, please gimme a HR10-250 free please" line and angle


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## newsposter (Aug 18, 2002)

the post office being the only one allowed to put things in my mailbox is a pretty good deal at .39 i think. Imagine what it would cost me to drive to a spot 3000 miles away when they do it for .39. 

WHAT a deal! I dont think 39 cents is a horrible price to pay for a monopoly


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## wmcbrine (Aug 2, 2003)

The Post Office is a _public_ monopoly, ultimately accountable to the voters. A _private_ monopoly is accountable to no one.


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## austinsho (Oct 21, 2001)

DTVPro said:


> people in here are just pissy because it would remove the tried and true "I think I'm going to dish, please gimme a HR10-250 free please" line and angle


And what's wrong with that? That's the very essence of the competition that so many here would dismiss an unimportant. My God...what's happened to people?


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## Lee L (Oct 1, 2003)

wmcbrine said:


> The Post Office is a _public_ monopoly, ultimately accountable to the voters. A _private_ monopoly is accountable to no one.


How is the Post Office accountable to voters? They are a private agency. they do a have a close relationship and are regulated by congress, but they are not part of teh government and have not been for a while.


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## rminsk (Jun 4, 2002)

Lee L said:


> How is the Post Office accountable to voters? They are a private agency. they do a have a close relationship and are regulated by congress, but they are not part of teh government and have not been for a while.


The US Postal Service is most definitly a goverent agency. My girlfriend is a laywer for them and it is a government job. From wikipedia: The United States Postal Service (USPS) is an "independent establishment of the executive branch" of the United States government (see 39 U.S.C. § 201) responsible for providing postal service in the United States; it is generally referred to within the United States as "the post office." Also from wikipedia: Agency of United States government (government monopoly)


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## drew2k (Jun 10, 2003)

And for the paranoid out there who don't trust "community-updated" web resources such as Wikipedia, you could go to USPS.com and read it straight from the source:


> The U.S. Postal Service® is the most visible and personal *of all federal agencies*. People know they can trust us. Postal employees are members of the communities they serve and they make significant contributions.


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## Lee L (Oct 1, 2003)

Well, I was wrong on that one. I swear I thought they had changed and were no longer a direct part of government.

I don;t really think that the PO is very accountable to voters though as the selection of Postmaster general does notusually come up in teh platform speeches presidential candidates make.


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## DTVPro (Jun 24, 2005)

I think what you're thinking is that their budget is run more like a buisness now instead of just being paid for from taxes

they have to operate at least break even


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## ping (Oct 3, 2005)

They actually get absolutely no revenue from taxes. Everything is from postage alone (and, as you say, they design that to break even over time).


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## super dave (Oct 1, 2002)

Here is a good article on the rumor: http://www.denverpost.com/business/ci_4076289

Merger talk a steaming dish of snippets

Anybody who believes EchoStar and DirecTV are about to merge should remember the forgotten tome "The Essential Guide to the Echo- Star/DirecTV Deal."

Australian media mogul Rupert Murdoch had his team of lobbyists canvass Washington with this 123-page diatribe in 2002.

It argued, in exhaustive detail, why Douglas County-based EchoStar should not be allowed to acquire DirecTV from Hughes Electronics.

The so-called guide said the deal was anti-competitive and would result in higher rates for satellite-TV customers. It backed its claims with letters of protest from state attorneys general and the National Association of Broadcasters as well as articles critical of the deal. At the time, EchoStar's Charlie Ergen had outbid Murdoch's News Corp. for DirecTV, fair and square. But not to be outdone, Murdoch went whining to Washington.

"This is a case of sour grapes," Ergen said at the time. "Their agenda is to scuttle the merger and pick up Hughes for cents on the dollar."

Ergen was right, but nobody listened. Murdoch's lobbyists had already won.

In October 2002, the Federal Communications Commission blocked Ergen's deal. The Justice Department blocked it too.

Then Murdoch's News Corp. acquired a controlling stake in DirecTV for $6.6 billion. Ergen was soundly beaten. It's tough dealing with an Australian-born mogul who can marshal the bureaucracy of the U.S. government against you in a multibillion-dollar deal.

And now - four years later - there are continuing rumors that DirecTV, the nation's No. 1 satellite-TV provider, will acquire EchoStar, No. 2.

EchoStar and DirecTV are working on several joint projects that involve the two-way transmission of voice, video and data. But if Murdoch were to bid on EchoStar, he'd have to argue against his previous arguments. Or he'd have to argue that the satellite-TV business has changed significantly over the past four years. And what's changed besides Murdoch's self-interest?

EchoStar employs 5,000 people in Colorado - many of whom would likely lose their jobs in a DirecTV takeover - so it's a good thing that the latest version of this rumor is bunk. It came from a glitzy media-mogul conference last week in Sun Valley, Idaho, sponsored by investment banker Allen & Co.

How did it start? All I can say is that when reporters and analysts file fat expense-account reports to attend prestigious events, they had better come back with some news.

The Los Angeles Times on Monday published a 1,700-word piece on the conference. It contained a wide range of useful observations. One part was slugged: "Other snippets from the conference."

"Snippet," I believe, is a technical term in journalism meaning: "Here's some entertaining banter to fill all that space we have in the Monday business section."

One of these "snippets" contained unattributed speculation that Murdoch was preparing to bid on EchoStar. It also offered such colorful third-party hearsay as, "Others at the conference said the wily Ergen had been telling guests that a merger could save $3 billion in expenses." Now that's quite a snippet.

Other newspapers expounded on this detail. Then on Wednesday, Citigroup analyst Jason Bazinet upgraded EchoStar stock to "buy" from "sell."

"We believe the strength is due to investor enthusiasm for a potential merger between DirecTV and EchoStar," Bazinet wrote, adding that it is unclear whether regulators would approve the deal.

Read carefully. The key words from Bazinet are "investor enthusiasm" and "potential merger." This is a Wall Street snippet, meaning a bunch of stock-market profiteers are talking up the stock to some reporters who need to file something interesting on deadline.

This hype sent EchoStar's stock to a 17-month high of more than $33 this week, though it pulled back slightly Thursday. I suspect the stock will ease lower when it becomes obvious that there really isn't a pending deal between EchoStar and DirecTV - just a couple of really clever snippets.


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