DirecTV’s Carey Disses Dish Merger Talk
Says There’s ‘Really Nothing’ to Media Speculation About Possible Union
By Linda Moss -- Multichannel News, 8/7/2008 10:35:00 AM
DirecTV CEO Chase Carey Thursday dismissed speculation about a potential merger between his satellite TV service and rival Dish Network.
“There’s really nothing,” Carey told analysts during a second-quarter conference call.
He also said that he doesn’t believe that federal approval of the combining of Sirius Satellite Radio and XM Satellite Radio Holdings paves the way for a satellite TV merger.
Carey made the remarks in the wake of a story in The Wall Street Journal Tuesday that reported that Dish Network CEO Charles Ergen was looking to pursue a merger with DirecTV.
That story, headlined “Dish Network Again Casts its Deal Gaze at DirecTV,” appeared a day after Dish Network reported a second-quarter loss of 25,000 subscribers—the first such loss in the company’s history.
In contrast to Dish Network, DirecTV reported Thursday that it gained 129,000 subscribers in the second quarter, nearly flat with the year-ago quarter’s 128,000 customers gained.
“In terms of the merger with EchoStar, we really have nothing new to say,” Carey said. “I don’t know whether The Journal needed to fill a page or what, but I have nothing. There’s really nothing.”
Ergen tried to engineer a merger in 2001 with DirecTV, but federal regulators essentially derailed his plans.
Carey said that the recent approval of the Sirius-XM satellite-radio merger was “probably a minor positive, not a major positive,” in terms of opening the door for a DirecTV-Dish merger.
“There are a lot of differences between the businesses,” Carey said. “It certainly doesn’t change the world from black to white.”
He reiterated what he has said before, that DirecTV and Dish Network are open to working together—if it makes financial sense. DirecTV has 17 million subscribers, while Dish has 13.8 million.
“There is really nothing new,” Carey said. “We will continue to look at things from top to bottom, but there is not a whole lot new to say about what we can do or would do with Dish. We’d do things that make sense if we could find them today. They’ve been reasonably modest…We want to make sure we’re opportunistic and continue to sort of at least try and aggressively find areas that we could together create value for both of us.”
In light of DirecTV’s strong second-quarter results, Collins Stewart analyst Thomas Eagan raised his third-quarter estimates for the satellite provider. He now projects that DirecTV will gain 198,000 subscribers in the third quarter, up from his prior estimate of 172,000.
John Malone’s Liberty Media, through a $1 billion stock swap in February, acquired News Corp.’s 41% stake in DirecTV.
Carey was asked about the likelihood of Liberty Media spinning out into one company DirecTV and the Liberty Entertainment Group, the tracking stock that holds Liberty’s interest in DirecTV, Starz, GSN and several regional sports channels.
“(It) is probably not anybody’s ideal scenario to have two public entities that by and large—we’re 100% of one and 80% of the other,” Carey said. “It is probably not what you’d logically go out and say that’s a great construct. That’s where we are. I think clearly there’d be opportunities to create a more rational one, but you have to deal with the issues that come out of it.”
As for DirecTV’s subscriber gains, Carey said that they come “from a broad mix…but certainly a meaningful number come from Dish.”
DirecTV has been an HDTV leader, but Dish Network recently announced it was substantially boosting is HTDV lineup. Carey seemed to remain undaunted, telling analysts “we are very comfortable with the (HD) leadership position” and that “there are an awful lot of press releases (from distributors) to muddy the water.”
DirecTV has seen much success with its aggressively marketed slate of HDTV offerings. It is adding 30 more national HD networks next week, which will bring its HD roster to 130 channels. DirecTV has also launched an on-demand service.
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