DirectTV And EchoStar: Making Nice For Bigger Deals?

Direct TV
Direct TV

DirecTV and EchoStar's Dish network are rivals, but apparently they're far less worried about each other than they are about rivals in cable and telecom. DirecTV and Dish are also the kind of rivals who once wanted to merge with each other, but since they can't, thanks to regulatory issues--they're playing nice with each other, to try to make their industry more viable.

Let's start with the deal that's done-- both DirecTV and Dish partnered with Clearwire Corp-- announcing the partnerships at the same time, even in the same press release. Clearwire is an up-and-coming WiMax company. Though it only has coverage in about 39 markets--it will help the satellite companies, in those certain markets, offer high speed wireless as well, to help retain customers tempted to switch to Cable's triple play.

Then there's the potential for Liberty Media and EchoStar to jointly purchase IntelSat, a Satellite services provider. It's been reported that they're considering making a joint bid for IntelSat whose satellites reach 99% of the world's populated areas. The bids should all be in by the end of the weekend, and they're expected to be in the $5 billion range.

The timing of this newfound coziness of the two companies is no surprise-- within a few months Liberty Media will complete its swap with News Corp for full ownership of DirecTV. And the consensus among analysts seems to be that Liberty's John Malone is much more interested in inter-Satellite collaboration than News Corp's Murdoch. Tom Eagan at Oppenheimer said: " Don't forget that Malone is a serial creator and seller of assets, and so he may be seeing something here [with IntelSat] both domestically and overseas where we can derive value."

So will the two "sat" companies team up to buy IntelSat? Still unclear. But one thing we do know, is that under Malone, DirecTV will be much more friendly with the competition.

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