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A DirecTV Merger With Dish? Believe It or Not, EVERYBODY Wins

It goes against convention, but in this case, a merger would actually benefit consumers and shareholders alike

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Reports of merger talks taking place between Dish Network (DISH) and DirecTV (DTV) has lit a fire under both companies’ stocks.

directv-dish-network-dtvThing is, this isn’t the first time Dish Network and DirecTV have wanted to hook up — back in 2002 they tried but were denied by federal regulators. So why should this time be any different?

Because everybody wins. That’s why.

The big cable conglomerates can drag out their lobbyists to try to quash a combo of Dish Network and DirecTV, but if the federal regulators are paying attention to what’s happening when it comes to television viewing habits, they’ll know that there’s a sea change underway.

In fact, stopping the DISH-DTV marriage would ultimately hurt consumers, content creators, shareholders and the many average people employed by the media industry.

How a DirecTV-Dish Network Merger Helps Consumers

The argument against media mergers has always been that combinations reduce choice and restrict competition. However, the cable lobby will say that the Comcast (CMCSA) tie-up with Time Warner Cable (TWC) isn’t restricting competition because the two companies have very little geographic overlap. In most markets it’s one or the other; not both. But Dish Network marrying DirecTV would mean 100% overlap.

At least, that’s what the cable companies want you to believe.

The truth is a merged entity still would have to provide competitive prices with cable. Most people decide between cable and satellite, and then between Dish Network and DirecTV. With just one choice, consumers will likely spend more time debating the cable/satellite question instead.

A merger in this situation does little to affect consumers. In fact, it probably helps.

Both Dish Network and DirecTV have their pros and cons as consumer services go. Together, they can make one offer that combines the good stuff from each service.

For example, Dish Network signed a deal in early March with Disney (DIS) that gives it access to ESPN and all the other great Disney content. Dish will use this content as the backbone of a new Internet streaming service. This makes sense given the younger generation (specifically trailing millennials between 14-24) more often than not watches movies and TV shows on devices other than traditional TVs.

A combined entity would be able to deliver the best streaming service possible (shared resources, etc.) rather than a watered-down version from one or the other.

Together, Dish Network and DirecTV can compete for the best content going while remaining competitively priced to cable. From where I sit, this is a good deal for consumers.

Shareholders Win, Too

This one is a no-brainer. Leon Cooperman’s sixth-biggest holding in his $7 billion hedge fund, Omega Advisors, is none other than Charlie Ergen’s Dish Network, at 3.9 million shares. In an email to The Street, Cooperman stated “I have nothing to add other than it makes great sense.” I’m certainly not going to argue with one of America’s great investors.

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Article printed from InvestorPlace Media,

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