Malone Says Any DirecTV-Dish Merger Still ‘Problematic’

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Liberty Media chairman John Malone said Monday that although a DirecTV-Dish Network merger would be “very synergistic,” it would still face problems winning regulatory approval.

Malone (pictured) made the remarks during Liberty Media’s second-quarter earnings conference call when asked about speculation about a potential satellite-TV merger. In February Liberty, in an $11 billion stock swap with News Corp., acquired a 41% stake in DirecTV, and has since increased its stake to 49%.

Last week, The Wall Street Journal reported that Dish Network CEO Charles Ergen, after losing 25,000 subscribers in the second quarter, was weighing whether to once again pursue a merger with rival DirecTV.  Ergen’s attempt to engineer such a merger back in 2001 ultimately was scuttled when it faced opposition from federal regulators.

Both Malone and Liberty Media president and CEO Greg Maffei were asked about the prospect of such a merger on the analysts’ call.

“I don’t understand why the journalists all of a sudden discovered the potential of a merger of Echo (Dish Network, formerly EchoStar) with Direct (DirecTV),” Malone said. “We’ve talked about it frequently in the past. It would be very synergistic if it were doable. However, we don’t see that the regulatory environment has changed since the last time we made comments on the subject. We think it would be problematic to try and merge the two companies in the current regulatory environment.”

In his comments, Maffei said that regulatory approval of Sirius Satellite Radio and XM Satellite Radio Holdings would not make a DirecTV-Dish Network merger any more likely to pass muster in Washington.

“As far as Dish and DTV (DirecTV), I’m not sure exactly why that got such a round of enthusiastic media/investor attention over the last two, three weeks,” Maffei said. “There really hasn’t been anything that’s occurred or changed the market conditions, other than potentially some people projecting on the impact or the foretelling of a Sirius-XM merger and what it might mean. I don’t know what’s changed, or whether that could be done. Obviously, there are a ton of synergies out there. That deal had challenges once. Whether it could be done today in a different environment, I don’t know enough about.”

DirecTV CEO Chase Carey also dismissed the merger talk last week during his company’s second-quarter conference call.

On Monday’s Liberty Media conference call, Starz Entertainment—part of the Liberty Entertainment Group—said that it posted an 8% revenue increase to $275 million.

“The number of subscribers to our channels continued to increase, and the Starz flagship channel finished first in total day ratings among premium channels in 10 of the first 26 weeks of the year,” Starz chairman and CEO Robert Clasen said in a prepared statement. “In addition, we completed our first affiliate deal for StarzPlay, our broadband movie service, with Verizon Communications.”

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