Still Thinking DBS Merger? Again, Don't Count on It

[Gugi47]

There are still lingering suggestions that the nation's two DBS platforms - DISH Network and DIRECTV - could pursue a merger.

And there are more voices who say a combination of small dish companies isn't likely going to happen.

In a note released Friday, Blair Levin of Stifel Nicolaus says his take on a possible DBS combination "suggests that neither the market facts nor the government's approach has changed enough to significantly improve the possibility of a DBS merger being allowed for a few years." The analyst said a single satellite TV company would create a monopoly in rural areas and a duopoly for tens of millions of other consumers.

Even with competitors like Web video and telco video platforms, DBS' market presence is "enough to cause the Justice Department to say no, in our opinion," says Levin.

Proponents of a DBS merger point to the recent combination of XM and Sirius as a potential positive for a satellite TV deal. However, Tom Eagan of Collins Stewart says, "Unlike the satellite radio merger, where the two players were considered to compete with myriad sources of audio, satellite TV is different."

A large number of rural households rely on satellite TV for television. "A DISH/DIRECTVTV merger would create one company as a source of TV for much of rural America, a prohibitive situation with the FCC and the DOJ," Eagan said.

The companies have attempted to merge operations, but the deal was blocked by regulators in 2002.