Malone Doesn’t See DirecTV/Dish Merger
But Satellite Giants Could Share Resources
By Mike Farrell -- Multichannel News, 9/26/2008 9:53:00 AM
New York—Liberty Media chairman John Malone tried to put the brakes on any further speculation that his DirecTV Group would merge with Dish Network, but added that the two satellite giants could share resources in the future.
Speaking at the Liberty Investor Day Meeting here Friday, Malone said that although in a year or more “anything crazy can happen,” for the time being “I don’t think it is worth either company’s energy or effort to approach the regulatory agencies with that proposal.”
The two satellite giants have attempted a union once before—in 2001 when EchoStar Communications (now Dish) chairman Charlie Ergen lobbed a $26 billion bid to buy DirecTV from Hughes Electronics. That deal failed to clear federal antitrust hurdles.
The competitive landscape hasn’t changed much since then, Malone said, adding that telco video—which could have helped a satellite merger by creating a viable third competitor—hasn’t quite panned out.
“I always felt that the probability of putting them [DirecTV and Dish] together depended on the future success of the telcos in the video business,” Malone said. “Then you could make the adequate competition argument. At the moment I don’t regard the telcos’ video success as being a demonstration of success.”
Malone, however, did say that he hoped the two satellite giants could work together on certain projects, a concept that has been batted around before but never came to fruition.
Malone said that the two satellite giants “looked pretty hard” at teaming up to develop terrestrial broadband services and even made an aborted attempt to purchase international satellite company Intelsat. While those deals never came to be, he added that the two may find more common ground in operational areas.
“The opportunity is there for cooperatively exploring, jointly developing channels, a broad range, a broad agenda of value creating or cost reducing efforts,” Malone said.
Malone said that the recent turmoil in the financial markets isn’t necessarily presenting bargain acquisition opportunities.
“In the shortest run, one would be imprudent to set sail for a long-term strategy until we see how this current credit and economic cycle turns out,” Malone said. “I don’t think it would be prudent to think that anything is cheap today.”s
And he added that cheap is a relative term—stocks may be down but that doesn’t mean companies are for sale.
“Some of these things may be cheap for an investor to take a position in, but not necessarily strategically are these assets available,” Malone said.
Malone also downplayed speculation that Liberty’s recent announcement that it will transform its Liberty Entertainment tracking stock into an asset-based security as an initial step into increasing its interest in DirecTV to 100%. Liberty Entertainment includes Liberty’s 50% interest in the satellite giant.
“Just because we’re spinning this to our shareholders, don’t expect some quick shotgun marriage between DirecTV and the entertainment unit,” Malone said. “I would be very surprised if that happened.”
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