DirecTV and Dish Merger Would Hurt AT&T, Analyst Says

JPMorgan’s Philip Cusick says any deal that separates DirecTV from U-verse is “dis-synergistic”
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While decision makers for AT&T and Dish Network are reportedly open to combining their eroding satellite TV operations, such a deal would not be favorable for AT&T, according to JPMorgan analyst Philip Cusick.

“We believe the dis-synergies of pulling DirecTV away from AT&T’s U-verse in buying power would be value destructive,”Cusick said in a note to investors today.

Bloomberg reported Friday, citing unnamed sources, that both companies have yet to hold talks, but that the idea of merging DirecTV and Dish wasn’t objectionable. Regulators stopped such a deal from occurring back in 2002, citing consumer harm. But with both DirecTV and Dish each losing hundreds of thousands of subscribers each quarter, there’s speculation that the FCC and Justice Department might view it differently this time around.

Notably, Cusick said there are still “personality and regulatory issues” associate with such a merger.

Combining DirecTV satellite and Dish would create the largest pay TV operator in the U.S., with 28.3 million subscribers. That scale would help both companies, which together shed more than 2.4 million users last year.

However, it would also harm the buying power of AT&T’s also eroding U-verse platform, which actually grew a little in 2018 but is down to just over 3.7 million subscribers. Same with the DirecTV Now virtual platform

Cusick, however, is in favor of a deal that adds U-verse and DirecTV Now to the mix. 

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