DIRECTV and DISH to Join Up - Analyst Blog

Competition some time results in strange business agreements. The two fierce rivals of the U.S. commercial satellite TV market, DIRECTV (DTV) and DISH Network Corp. (DISH) are on the verge of entering a joint deal with a media buyer through which interactive advertisements will flow to both DIRECTV and DISH subscribers. In April 2010, these two companies formed a joint venture called ‘Advanced Satellite Advertising Platform' to offer a combined interactive advertisement platform to media buyers.

We believe the primary reason for this business cooperation is the massive competitive pressure that the satellite TV companies are facing from cable MSOs, fiber-based networks of telecom operators, and the newly developed Internet video streaming service providers. By agreeing to shake hands, both DIRECTV and DISH will get necessary economies of scale, a combined subscribers' base of more than 35 million that may offer a lucrative market opportunity to several large advertisers.

Earlier, most of the giant U.S. cable operators, namely Comcast Corp. (CMCSA), Time Warner Cable Inc. (TWC), Cablevision Systems Corp. (CVC), Charter Communications Inc. (CHTR), and Cox Communications Inc, have formed similar joint venture called ‘Canoe Ventures LLC' in order to share a common interactive TV advertisement platform.

The DIRECTV-DISH joint venture will enable subscribers to request more information from their respective remote control units while the advertisers will be able to integrate some value-added services like games and information galleries into their advertisements. The joint satellite sales unit will act as a single window to the advertisers to run their advertisements on the common DIRECTV-DISH platform.

The Advanced Satellite Advertising Platform will do business with Rentrak Corp. (RENT) and Kantar Media to process data from the set-top boxes of all the subscribers. That processed data will be shared with the advertisers to facilitate their decision making. Currently, both companies are offering long-form spots to advertisers that would run in rotation 24-hours a day for two weeks at a time.

 
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