DirecTV is buying rival Dish Network in an attempt to effectively compete against streaming services.
On Monday, the satellite TV provider announced it will pay $1 for EchoStar’s video distribution business, Dish DBS, which means it will own Dish TV and Sling TV. DirecTV also agreed to assume $9.75 billion of Dish's debt.
Streaming services have gained dominance in recent years over satellite TV due to their on-demand accessibility with internet connectivity. As subscription prices for traditional satellite TV increased and the desire for on-demand viewing surged, more households began to cut the cord from traditional satellite providers.
However, DirecTV and EchoStar said that the merger would benefit consumers "by creating a more robust competitive force in a video industry dominated by streaming services owned by large tech companies and programmers."
The merger comes as streaming services have been increasing subscription costs and cracking down on password sharing in order to remain competitive and boost profitability.
Experts say this merger could help DirecTV gain an edge by offering smaller but cheaper packages.
The merger comes as streaming services have been increasing subscription costs and cracking down on password sharing. (Reuters/Rick Wilking / Reuters)
The companies indicated that the size of the merged organization will encourage programmers to permit DirecTV to offer smaller packages at more affordable prices.
The companies also said they are in a better position to consolidate content onto an "easily accessible" platform and that it would maintain the widest range of programming and diverse perspectives on pay TV, including local news.
Business strategist Marva Bailer called it a "strategic" merger. By combining their buying power, they'd be able to negotiate better deals, potentially offering competitive pricing, according to Bailer.
It's also "expected to provide greater leverage in offering programming packages that better align with consumer preferences, offering smaller, more customized options," she said.
Streaming services like Netflix have gained dominance in recent years over satellite TV due to their on-demand accessibility with internet connectivity. (Nikos Pekiaridis/NurPhoto via Getty Images / Getty Images)
DirecTV and Dish offer a combination of live TV channels, on-demand content, and premium networks, including sports, news and local programming, Bailer said.
Another "key advantage" is that it will effectively allow consumers to access both live and content from a single platform without the need to switch between multiple apps or devices.
By offering more comprehensive content options, blending traditional TV with streaming services, and providing greater flexibility in bundling, she agreed that it would make them highly competitive against services like Netflix, Hulu and Disney+.