Satellite Distributors Need New Businesses - Or A Merger -- To Survive
They don’t have the extra-revenue-generating businesses, especially home and mobile phone services, that cable TV operators have.
Both DirecTV and Dish Network do have broadband services, but they are limited, somewhat lower-speed, ones targeted to rural consumers who can’t get mainstream, terrestrial-based, mobile networks.
Dish Network has been looking to acquire companies that have big bandwidth, either from mobile or broadband businesses.
DirecTV has been looking at starting or buying subscription video-on-demand services, like Hulu Plus. DirecTV believes that over-the-top TV services will be the wave of the future, or at least a strong complement to its satellite business.
If these directions don’t work for Dish or DirecTV, both have again been musing about the possibility of merging. (They tried to do this back in 2002, but the FCC put the kibosh on it). Together they would have about 34 million homes, or a little more than a third of all U.S. pay TV consumers.
Over a decade ago, cable TV operators were ahead of the curve in starting and expanding phone and broadband businesses. Now, cable TV operators regularly post subscriber declines for their endemic video consumers.
Even the description “cable TV operators” is fast becoming a misnomer.
So it figures -- If cable operators have been regularly losing video consumers, can satellite companies be that far behind? On a yearly basis, DirecTV and Dish Network still added customers in 2012: DirecTV 199,000, and Dish 89,000. But that was far lower than six years ago.
So a merger makes sense, at least in the short term -- especially considering soaring programming carriage costs that affect all TV distributors.
But short term isn’t enough in the fast-changing media and entertainment business.