DISH Network Corp (DISH), DIRECTV (DTV): Revenge Is A Dish Best Served Cold

Now that DISH Network Corp (NASDAQ:DISH) CEO Charlie Ergen has lost out on both Sprint and Clearwire, everyone is wondering what his next move will be. Chances are he’s following the adage of “revenge is a dish best served cold,” which means that he’s calculating his next move. There’s also the saying that “everything happens for a reason” and that a bigger and more exciting opportunity awaits DISH Network Corp (NASDAQ:DISH) and its shareholders. One thing we know for sure is that Ergen isn’t going to stop trying to make DISH Network Corp (NASDAQ:DISH) an even bigger force in the media landscape.

The strategy

The strategy for DISH Network Corp (NASDAQ:DISH) and other media companies is to interconnect people’s lives. The goal is to spread entertainment beyond the living room and connect people wherever they are. People are increasingly doing more on their smartphones and continue to transition to a more cordless society. The strategy for DISH Network Corp (NASDAQ:DISH) was to buy Sprint and use its spectrum so that mobile users can watch DISH Network Corp (NASDAQ:DISH) on their mobile devices wherever they are. Companies such as AT&T, Verizon, Comcast and DirecTV are all looking to accomplish the same thing, and there’s a race among these companies to see who can do this first.

The satellite industry

Just over ten years ago, Dish Network and DIRECTV (NASDAQ:DTV) tried to merge, but the merger was rejected by the FCC. Today, the landscape is different than it was back then. Now content providers are in the driver’s seat because of all the options to distribute their content. Content distributors like Dish and DIRECTV (NASDAQ:DTV) have a disadvantage in negotiating fees for content. Content providers are asking and getting top-dollar for their programs.

The biggest fan of consolidation among cable and satellite providers is billionaire and cable TV pioneer John Malone. Malone has a vested interest since he owns 5% of DIRECTV (NASDAQ:DTV) through Liberty Media. At this year’s Allen & Co. conference, John Malone told Bloomberg:

It would be good if DirecTV could combine with Echo or Dish or whatever Charlie calls it now just because scale economics in the media business drives down costs and makes it possible for larger investment.

A DirecTV/Dish combination would have 34 million subscribers. The cost savings would be tremendous, as its would eliminate overlapping ground facilities and staffing. Even though the landscape has changed since they tried to merge the first time, there’s no guarantee the FCC would allow a merger to happen now.