Commentary

DirecTV/Dish: What Can The Company Dish Out Now?

Although growth for the DirecTV-Dish Media merger will not focus entirely on existing distribution -- satellite-delivered TV network packages -- it also won't be all in for individual streaming platforms. Instead, think more about hybrid products -- and about virtual, interne- based services, such as DirecTV Stream and Sling TV. 

The latter is a focus -- especially in rural areas -- for TV programmers. That's where DirecTV-Dish believes it can make progress.

“We see this as complementary. This is not an either/or [for programmers],” says Bill Morrow, CEO of DirecTV, speaking to CNBC on Tuesday.

“They want to have a certain reach with their direct-to-consumer offering. And where the consumer won't go, that's where we step in... We think programmers will go back to this partnership concept that actually helped them to get started in the beginning.” 

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The deal looks to shift legacy pay TV distributors -- similar to what Charter Communications started doing a year ago, and where others have followed (including DirecTV) --  in being able to package streaming and linear TV networks together. 

Even then, there's still a long way to go. Roku or Amazon are way ahead when it comes to streaming distribution of apps -- both for digital-first platforms and streaming legacy-based TV network services.

Scale is also an issue. Roku is at 82 million monthly active users, for example. According to rough estimates, Amazon is in the same range.

“The combined company would be better equipped to compete with OTT providers, despite pay-TV headwinds, and they would have greater leverage in negotiations when it comes to linear and SVOD offerings,” Adam Rhodes, senior research analyst at Reorg, tells TV Watch.

The good news is that although federal regulatory agencies struck down an earlier proposed DirecTV-Dish merger about 20 years ago due to antitrust/anticompetitive concerns, this is a different marketplace. The deal is very likely to go through.

“This merger is much more likely to survive regulatory scrutiny now than it was in 2001, given increased competition within the space and the proliferation of rural broadband.”

Still, it seems legacy pay TV distributors need to move more quickly into other growth areas.

Dish's parent company Echostar is heavily betting on its growing size in the wireless industry, with its Boost Mobile brand. Others like Charter and Comcast Communications have a strong footprint in broadband -- although they have weakened a bit -- as well as mobile and wireless businesses.

Before the most recent proposed Dish deal, DirecTV had none of that -- which put it in a difficult position. DirecTV's deal with SpaceX's Starlink -- a satellite-based internet service -- puts it on a better competitive footing with other pay TV distributors that have in-house broadband services to offer. 

Now the real work needs to begin -- more TV marketing efforts (already started up by DirecTV) in convincing consumers it is more than just a satellite-TV business.

Even then, will consumers buy in when they are now much more comfortable to the non-cable centric, non-traditional linear TV-based streaming/on-demand world?

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