Stock prices of satellite-TV companies came hurtling toward Earth Thursday after Charlie Ergen, chairman of the second-largest player in the sector, Dish Network, said a deal with DirecTV was unlikely.
Ergen said he couldn’t afford such a deal as DirecTV’s share price has become a bit too frothy.
DirecTV’s stock is up about 50 percent over the past 12 months — in large part because of the expectation that there will be consolidation in the pay-TV sector.
After Ergen, in a conference call to discuss Dish’s quarterly results, threw cold water on a deal with DirecTV, Dish’s shares fell 4 percent to $60.14.
Shares of DirecTV were down 3.4 percent Thursday to $85.11.
Ergen revealed on the call he may, instead, have T-Mobile in his sights.
Responding to a question on the call, Ergen said if regulators blocked the expected Sprint-T-Mobile hook-up then “T-Mobile would have strategic interest to us, yes.”
The mating dance is being driven by the belief that there is a brief window of opportunity.
Many in the pay-TV sector believe now is the time to get the government to consider another mega-merger alongside that of Comcast-Time Warner Cable.
Meanwhile, subscriber growth in the satellite sector is coming to a screeching halt, one analyst said in a report Thursday.
“Satellite gains have all but stopped,” noted telco analyst Craig Moffett of MoffettNathanson, who issued his quarterly analyses of the pay-TV sector Thursday following earnings reports from Dish and Cablevision.
The numbers underscore an intensifying share war between cable, satellite and telco giants.
The pay-TV universe shrank by 459,000 subscribers in the year ended March 31, said Moffett.
The satellite sector grew by just 52,000 subscribers in the first quarter.