Shares in US satellite pay TV companies DirecTV and Dish Networks have spiked after rumours of a merger between the pair emerged this week.
Following a report from Bloomberg stating Dish chairman and co-founder Charlie Ergen (left) had approached rival DirecTV’s CEO Mike White, Dish’s shares grew.7.9% to US$63 and DirecTV’s shot up 6.6% to US$77.96.
Dish’s share price had fallen 1.4% to US$61.22 and DirecTV’s was down 3.5% to US$74.67 at press time, but the spike suggests investors would be keen on a merger.
Dish claims more than 14 million subscribers in the US, while DirecTV has more than 32 million combined subs in States and Latin America.
Should they merge, the US cable market would be further consolidated as it goes through a period of rapid change. Comcast is set to buy rival Time Warner Cable for US$45 billion, though the deal has lead to fears of creating a monopoly in the market.
A combined Dish-DirecTV business would provide a viable competitor to Comcast-TWC, but further marginalise smaller players in the cable and broadband markets. Bloomberg reported Ergen approached DirecTV in direct response to his rivals’ deal.
Yesterday, the New York Post reported the three million TWC subscribers Comcast must shed in order to satisfy regulators and complete the deal may be spun off. This would see TWC CFO Arthur Minson and COO Dinni Jain running a new cable business separate to the Comcast cable group.