I said it was Primestar picking up only rural customers, not DISH. Your view on the DOJ suit is exactly why I am optimistic on them winning in court. This is a political backlash on a legal monopoly. The government tried to regulate the industry back in 1992. What happened?
The answer is that many small to midsize cable companies found themselves in need of capital to upgrade and expand, while the government kept them from raising their rates to generate cashflow to invest in thier biz. The large cable companies (Time Warner, TCI, Comcast and Cox, etc.) had access to financing in the capital markets and leveraged thier balance sheets to buy up all these out of luck small to medium cable companies on the cheap. It was a government sponsored discount sale for all the big cable players. The government let them go on a 4 year buying spree and at the end, realized they had created a massive concentration of cable assets in an industry with high barriers to entry. In 1996, they used the Telco Act to prod the telco's to compete in video and prod cable to compete in telephone. Sorry, but it didn't happen. Now they feel DBS is thier last hope to compete against cable and they are pulling thier hair out that Primestar will be in that game.
DBS has a short window to really pick up new subs from cable (2 years), by then, cable will have digital services that will hurt both telcos and DBS. It has been talked about for years, but the Cable 98 show proved they are ready, both on infrastructure and services. I am long term bullish on cable and short term bullish on DBS. Primestar is a pawn in this high stakes political and corporate game. Uncertainty creates opportunity. We shall see. |
