Dish Network and DirecTV Could Merge. It Won’t Stop Them From Dying a Painful Death.

February 20, 2020 Topic: Technology Blog Brand: The Buzz Tags: DirecTVDish NetworkCable TVStreaming ServicesNetflix

Dish Network and DirecTV Could Merge. It Won’t Stop Them From Dying a Painful Death.

Would this help slow or stop the massive amounts of customers leaving both of their companies? No. 

Imagine this: Two dying companies that sell completely obsolete services that millions of people are canceling come to an obvious crossroads. They know they can’t survive as they exist today. So, instead of trying to appeal to the marketplace with new products and services that are innovative, exciting and cutting edge, they decide to double down on the same tired products and services that fewer and fewer will want in the years to come. In fact, they decide that in order to survive, they must merge and combine their resources.

It makes sense, depending on the industry, right? In some cases, sure. But if Dish and DirecTV do merge, as is being at least considered, it would be a disaster and a waste of billions of dollars. It would be the equivalent of two zombies merging on their way to the graveyard for good. While AT&T might love the idea, as they get to dump this dying brand off their balance sheets, it makes zero sense for anyone else.

And yet, it could very well happen. Dish Network’s Chairman Charlie Ergen during a recent call with industry analysts called the potential merger “inevitable.” He also said “the growth in TV is not coming from linear TV providers, but from huge programmers,” which means Netflix, Hulu and the rest of the streaming world. Ergen also mentioned the fact that “you just can’t swim upstream against a real tide of big players,” clearly thinking about the impact streaming services are having on his profit margins and basic subscriber as well as overall retention rates.

This situation reminds me a little of a similar failed merger in a very different but also dying industry: when Sears merged with Kmart. That is almost hard to type, as it came at a time right before the great recession and before online ordering became as popular as it is today. However, at least you can forgive those two companies as not seeing economic and digital trends coming to destroy their profits—Dish and DirecTV are both already are in a death spiral. Such a merger would be like Sears and Kmart merging ten years later. The outcome is obvious. 

There is, however, a slim chance this could work. If you took the best of what each dish provider does best—NFL Sunday Ticket, Dish’s foray into cellular services and a large amount of wireless spectrum as well as some experience in streaming services—there are some amazing product offerings that could be developed. One thought: why not a new 5G-based residential high-speed internet service and a totally new streaming service to run on it?

Clearly, this new company would need to think about a post-dish world and fast. Otherwise, they will end up just like the combined company that emerged from Sears and Kmart. And that means bankruptcy.

Harry J. Kazianis serves as a senior director at the Center for the National Interest and Executive Editor of their publishing arm, the National Interest. Harry enjoys writing about technology issues and products from a real-world perspective, having previously worked in the telecommunications industry from 2000-2011. You can follow him (or yell at him) on Twitter: @Grecianformula.