BIG NEWS
network would involve installing or leasing terrestrial base stations across the country in the form of transmitter towers so that DirecTV can offer wireless broadband. An earlier initial request for quotes went out in late 2005, followed by a more formal request for proposals, sources close to the deal said.
Asked how many tower companies had the infrastructure achieve full nationwide coverage, the analyst said, "not many."
Some of the leading tower companies mentioned by sources as being in the mix include Crown Castle (CCI:NYSE - commentary - research - Cramer's Take) and SBA Communications (SBAC:Nasdaq - commentary - research - Cramer's Take) and American Tower (AMT:NYSE - commentary - research - Cramer's Take). A deal could add up to billions of dollars over several years, including the cost of transmitters that would be installed on towers and rental costs. Of note, tower rental companies are fixed cost businesses and adding a huge rental contract on an existing network would boost profits.
"We're talking about thousands of towers and most fall in the range of $5,000 per tower, per month," says a source.
As new content distribution models such as wireless and IPTV emerge, sources speculate this could be a two pronged strategy -- enabling wireless broadband for DirecTV subscribers and also giving News Corp. an in-house broadband network. That network could be used as the gateway to distribute its content, and also more control of its overall destiny.
"He's trying to do the same thing he's done with television," said one person familiar with Murdoch's plans, "controlling both content and distribution."
It is unclear what short-term impact a significant capital expenditure such as this would have on DirecTV or News Corp., both of which have significant cash on hand.
But with cable valuations already under water, DirecTV teaming up with Echostar and building out a broadband network could put more pressure on rivals. |
