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Dishing It Out

There may soon be just one satellite radio company. Now, the stars seem to be aligning for there to be just one satellite TV company, as well.
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Written by Tom Steinert-Threlkeld on

There may soon be just one satellite radio company. Now, the stars seem to be aligning for there to be just one satellite TV company, as well.

First, in radio. The FCC is close to making a decision that will let Sirius Satellite Radio Inc acquire arch-rival XM Satellite Radio Holdings Inc.

Chairman Kevin Martin (a Republican) says it is okay.The two Democratic commissioners seem to be leaning against. Republican Robert McDowell is in favor. Republican Deborah Tate gets to make the final decision.

Meanwhile, Dish Network shares are dropping, after the No. 2 satellite TV company said its marketing agreement with telephone, Internet and television service supplier AT&T Inc. would end at the end of this year.

Now, Dish and AT&T could come to a new deal, over the next six months. But you have to suspect that AT&T wants to switch to DirecTV to serve TV customers in places where its U-Verse TV service is not available.

DirecTV is on a roll. It now has 17 million subscribers, up 4.8% over a year ago. Dish Network now has almost 14 million, but growth has slowedway down.

Dish’s chairman, Charlie Ergen, seemed to set the stage for a merger with DirecTV at the start of the year, when he split EchoStar Communications Corp. into two companies: Dish Network Corp., which contains the satellite TV network, and EchoStar Holding Corp., which includes the Slingbox and its other technology manufacturing interests as well as services provided by 11 orbiting satellites.

Then, in March, a satellite it launched failed to reach orbit. That will cost it again in the growth curve, because that bird was to help it carry more HD signals. DirecTV has been the market leader there, against both Dish and cable TV operators, and is stepping on the pedal.

In April, John Malone’s Liberty Media Corp. upped its stake in DirecTV, to 48%. Liberty is becoming increasingly active in trying to build a programming and distribution business, built around DirecTV.

And, of course, Malone has been there before. He ran Tele-Communications Inc., the nation’s largest cable company before it was sold to AT&T.

Malone has made murmurs in the last year about talking with Ergen about figuring out ways that the two satellite TV operators could possibly share some behind-the-scenes functions, to increase efficiency.

He’s steered clear of saying he might talk to Ergen about acquiring Dish Network – even though it’s now a separate company and seemingly teed up for a possible merger.

Don’t forget: Ergen tried to acquire DirecTV back in 2001 .

But the deal was rejected, as being anticompetitive. FCC chairman Michael Powell said “"The combination of EchoStar and DirecTV would have us replace a vibrant competitive market with a regulated monopoly. This flies in the face of three decades of communications policy that has sought ways to eliminate the need for regulation by fostering greater competition.”

Of course, that was before telephone companies – like AT&T – got (back) into the pay TV distribution business. Now, the “triple play” you could almost say is cable v. satellite v. telco TV companies. Web video lurks alongside, awaiting a serious “multichannel” player (like, maybe, Hulu?).

And, of course, a decade ago, the FCC conditioned the granting of licenses to XM and Sirius on pledges not to merge.

So you can be sure that John Malone is paying close attention to how Commissioner Tate decides to vote.

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