Last Updated: January 3, 2022.
Nearly 20 years ago, Dish Network and DirecTV were set to merge until the FCC blocked it. But a merger is once again appealing to these companies, and much has changed since the last FCC decision.
The FCC Decision Two Decades Ago
At the turn of the century, both Dish Network and DirecTV saw the writing on the wall. Their industry was undergoing significant changes, and they would no longer be the behemoths they once were.
A merger made a great deal of sense, but the Federal Communications Commission and Department of Justice blocked it because there were many regions of the U.S. where DirecTV and Dish were the only options and many others where people could choose cable or them.
That left concerns that the merger with cause monopolies and duopolies in many areas of the country, and so, they blocked it.
What Has Changed Since Then for the FCC
The entire landscape of the industry has changed. Just six years after the Dish-DirecTV merger was blocked, the FCC and DOJ allowed a merger between Sirius and XM.
A similar argument could be made that that merger created a monopoly since they were the only shows in town. But the FCC agreed that it no longer made sense to consider XM and Sirius in isolation.
The market had provided drivers with many alternative options for in-car entertainment. The same happened with TV. It is no longer just the satellite and cable companies.
What Has Changed Since Then for DirecTV and Dish
If the framework for the FCC decision had changed, why did DirecTV and Dish not go back to the table? Well, after the merger was blocked competition between the two rivals became even fiercer, and some industry insiders referred to some of the relationships between the two to be contentious.
Then, there were other troubles, such as AT&T being sued by the DOJ for collusion. But much has changed since then. Many of the people said to have contentious relationships are now gone.
AT&T, the parent company of DirecTV, has recently entered into a number of partnerships with Dish, and it is not so long ago that the chairman of Dish Network essentially said that a merger was a matter of when not if.
The Catalyst That Is TPG Capital
Another factor to consider is TPG Capital, a private equity firm. TPG recently assumed operational control of DirecTV and has a minority stake.
It is no secret that the company did this with the intent to make the merger happen and thus turn a tidy profit on its investment. With both sides now recognizing the merger as inevitable and this third party laying the groundwork, it is bound to happen.
The Road Ahead
Industry experts believe there is little chance that the FCC will interfere this time. Now, it is a matter of getting all the pieces in place and hammering out the details of which there are many.
DirecTV and Dish are both much more complicated companies than they were two decades ago. Dish, for instance, is currently building a 5G network with Amazon, which is what saved the T-Mobile and Sprint merger.