Dish and DirecTV are close to a deal to merge (again).

Business has gotten tougher for Charlie Erzen, the founder of satellite TV giant Dish, since the government blocked his 2002 bid to merge his company with DirecTV.

Since then, streaming services have disrupted the traditional TV industry. Cable and satellite companies lost about 30 million subscribers, leaving only 50 million. And the outlook for traditional providers has become so grim that Ergen warned two years ago that Dish and DirecTV would “melt away” without a deal.

The challenges ahead are just as worrisome. Dish's parent company, EchoStar, sought to stem the decline in Dish's business by spending billions building a 5G wireless cellphone network. It now faces the prospect of fending off nimbler, faster competitors like Elon Musk's Starlink and Amazon's Project Kuiper, which put the first satellite into space last year.

So Dish and DirecTV are trying another. DirecTV is in the advanced stages of acquiring Dish, two people familiar with the situation told DealBook, requesting anonymity for confidential discussions. News of the merger talks, which could still fall apart, was previously reported by Bloomberg.

The latest effort shows how much the entertainment industry has changed in the past two decades. And that raises a perhaps more thorny question: Did the government fail to see how the TV market had changed the last time it blocked the deal?

The television landscape looks nothing like it did 22 years ago. In 2002, the Justice Department and the Federal Communications Commission were concerned that a merger between Dish and DirecTV would harm rural customers.. but Many outer pockets of the United States no longer rely on satellite companies as their sole provider of TV. Broadband access has exploded as companies like Comcast and Charter expand further.

Even in rural areas, where Dish and DirecTV previously faced little competition, the number of entertainment providers has skyrocketed as companies such as Disney, Warner Bros. Discovery and Paramount have launched streaming services.

The government now considers these new players as viable competitors. The ascent of Netflix and other rivals was part of AT&T's argument for defeating a Justice Department rejection of its $84.5 billion acquisition of Time Warner in 2018.

Dish and DirecTV have been on the decline since their merger attempt was blocked Dish looks particularly vulnerable: It has nearly $2 billion in debt coming due in November, threatening the company with bankruptcy, said Craig Moffett, an analyst at Moffett Nathanson.

Moffett argued that allowing the two companies to merge would almost certainly be better in the short term.

“This deal is urgent in part because these businesses are in a rapid death spiral,” he said. “Satellite operators are one-trick ponies. As linear video goes the way of the buggy whip, so does satellite TV.

But there may not be more competition yet enough competition The Justice Department was concerned as recently as 2020, when a similar deal was being considered, that 5G service in rural areas was not widespread enough to allow a deal, a person familiar with the department's thinking told DealBook. It may still be years before cellphone providers are able to deliver high-speed home internet as fast and efficient as services offered by the likes of Starlink. And there is still plenty of direct competition between the two in vulnerable rural areas, antitrust experts said.

And organizations in danger cannot always be united. Because regulators don't want companies to use industry challenges as an excuse or, worse, a ploy. Some argue that a deal in a challenged industry could start a race for other mergers, leaving many companies weaker, not stronger. (See Airline industry.)

“Consolidation usually creates opportunities for larger companies,” Lou Borrelli, head of the National Content and Technology Cooperative, a cooperative of regional cable and broadband providers, told DealBook. “And smaller companies aren't always in a position to take advantage of these types of deals.”

That's part of the reason “failure to assert defense” has such a high bar.

“Just because it might be a slow-melting ice cube doesn't mean you sell to the biggest competitor in the market,” Assistant Attorney General Jonathan Canter told DealBook in June.

How you view the deal may depend on how you feel about SiriusXM. The government allowed XM and Sirius to merge in 2008 because of the potential for competition from HD radio, iPods and MP3 players. Seventeen years later, SiriusXM has $8.75 billion in annual revenue — and is a major provider of live radio for drive-time commuters across America.

Some say it was an example of the government properly allowing a deal so that a company could position itself for the risk of powerful new rivals. Others argue that the merger allows a broader audio supplier to become stronger in the face of threats that never really materialized.

If Dish and DirecTV close the deal, such a controversy seems unlikely.

“At the rate these trades unfold, you might be looking at buying yourself a year or two extra,” Moffett said. “That's all.”

– Lauren Hirsch and Benjamin Mullin

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From Wall Street to Silicon Valley, everyone wants to know what's next for Lena Khan?

On Wednesday, the youngest-ever chair of the Federal Trade Commission reached the end of her three-year term, during which she helped overhaul the government's approach to antitrust enforcement and brought a series of lawsuits against large corporations.

Khan, 35, can remain in his seat indefinitely, unless he is replaced. For each of these results there are loud factions.

Under his leadership, the FTC has brought antitrust cases against tech giants Meta, Amazon and Microsoft, sometimes using ambitious legal arguments. The company has tried to ban almost all non-compete clauses and prevented Lockheed Martin and Nvidia from entering into multibillion-dollar deals.

A strong bipartisan group believes the FTC chair is expanding the scope of antitrust law beyond its legitimate limits, moving quickly to redefine the boundaries of key concepts like monopoly.

Khan, his staff and his allies argue essentially the opposite: that his leadership is restoring a strong, proactive antitrust enforcement role to a legal and economic system that has long allowed those regulatory muscles to harm consumers and harm healthy market competition. . Some Democratic donors associated with finance and technology have publicly campaigned for Kamala Harris to remove Khan as FTC chair if she wins the vice presidential election. Harris declined to comment on whether the campaign would support Khan in his position.

Talmon of The Times sat down with Joseph Smith Khan at a table in his office — suitably furnished with the board game Anti-Monopoly, with a faithfulness to the classic version — to discuss his transformative tenure and the road ahead. The interview has been shortened and edited.

There seems to be a visceral distaste for you from many on Wall Street, including merger-and-acquisition lawyers and market participants. Do you think you misunderstood?

I think you first need to figure out which voice you're focusing on. View any of our comment dockets online. We got 25,000 comments from people all over the country saying, “Here's how an antitrust has ruined my life, and how the FTC's elimination of them will make my life better.”

In Washington, it is very easy to privilege only some voices and not another set of voices. And so we try to open our doors and make sure that we're putting the whole country in mind, rather than people in power, or a reporter that they can call and a member of Congress.

One of Wall Street's arguments against your approach is that acquiring a company that may seem like a competitor is actually part of driving healthy markets.

First, my role is not that of a policymaker saying thumbs up, thumbs down on consolidation. We enforce the law. I get it. There are probably contract-drafters who wish we didn't have antitrust laws. And that's one thing you can advocate for in Congress.

I also find it interesting that over the last few decades, there have been a set of case studies on mergers that were allowed to go through based on the efficiency they conveyed to consumers or other market participants. Many times, those skills don't actually materialize, and when they do, if you don't have enough competition in your market, companies won't have an incentive to pass those skills on to everyone else.

How much did competitive practices and consolidation contribute to the inflation we saw from 2021 to 2023?

If you don't exercise mistrust, you're allowing decades of consolidation that can more easily create inflationary spikes, because your system as a whole is less resilient to those disruptions.

Second, a more concentrated market, when you have fewer players, is able to easily coordinate to raise prices or keep prices higher.

I would argue that Kamala Harris is talking about your book as part of her campaign strategy. And yet, there is this interesting chatter, “Oh, what's up with Lina Khan?” Do you ever think that your work could be small?

I can't predict what will happen in November or later.

Haven't you gotten any whispers, any words that you wouldn't want in a Harris administration?

No, I think the opposite. We saw the vice president note how he became a prosecutor taking on illegal practices by corporations that were harming homeowners, that were harming patients, and that's what the FTC does.

Thanks for reading! See you on Monday.

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