Sprint Corp. plans to make a bid for T-Mobile US as soon as June or July 2014, Bloomberg reports. AT&T has approached DirecTV about a purchase. Comcast wants to buy Time Warner Cable, spinning off enough subscribers to make Charter Communications the new number two among U.S. cable TV operators.
If all those possible deals become actual offers, Dish Network is certain to move to find a merger partner as well. Dish needs to bulk up as its core video entertainment business slows and eventually shrinks.
With the possibility of a merger with DirecTV off the table, it would face much more pressure to link up with a firm that could help it build its mobile communications network and help Dish escape being a “satellite-only” communications provider.
Dish would benefit if all the other mergers were moving through the review process at the same time. The issue for Dish is “who is left?” Verizon would be the only national service provider that was not involved in a major deal to gain scale, but Verizon is not thought to be the best fit for Dish.
Though many have argued both Dish and DirecTV eventually would be bought by one or more of the U.S. telcos, many had argued Dish would be more valuable for AT&T, because of Dish’s mobile spectrum holdings.
But AT&T might at this point consider that regulators would not look favorably on it acquiring so much new mobile services spectrum.
Such is the nature of periods of consolidation in markets. If any player makes a move to change market share dynamics, and gain strategic advantage, the other major players often consider their own moves to keep pace.
The Sprint bid is a gamble, given the apparent opposition of antitrust and Federal Communications regulators. But, it is less a gamble if AT&T and Comcast are making major acquisition moves at the same time.
Now there is no telling what moves Verizon, Dish or others might make.
Sprint can argue it will face a different market structure than it would have if the other mergers were not happening. Instead of proposing a deal regulators think would increase market concentration, Sprint can argue the market is already concentrating, and that it is simply acting in self defense.
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