Analyst Discounts Satellite TV Merger Buzz

Now that the duopoly in satellite radio is about to get regulatory approval for a merger, Wall Street is pondering whether the satellite-TV duopoly of Dish Network and DirecTV might someday combine, too. Sanford C. Bernstein senior analyst Craig Moffett thinks the XM Satellite Radio-Sirius Satellite Radio merger -- which is expected to get approval with significant conditions attached -- is not a precedent for satellite TV, despite a buzz on Wall Street to the contrary, saying, "The regulatory issues ... are entirely different." Moffett said the criteria used in considering XM-Sirius was a broad definition of the audio-services market, which not only embraced terrestrial radio, but also portable music devices such as iPods. In such a big pie, satellite radio is a relatively small piece and, thus, regulators deem the merger as not anticompetitive. In 2002, both the Department of Justice and Federal Communications Commission opposed a proposed DirecTV-Dish merger based on the conclusion that satellite TV is a monopoly in rural America, where fixed-wire cable service is not widely available. That narrow definition of the marketplace made DirecTV and Dish big fish in a small fishbowl.