Will Ma Bell buy Echostar?

By Peter Radizeski, RAD-INFO

Rumors abound about Ma Bell looking to acquire EchoStar. I wonder if they are trying to buy EchoStar or just the DISH Network division. EchoStar had announced that it was buying Sling Media and was likely combining it with the infrastructure business (satellites, set-top boxes); then spinning off the consumer division. If the IRS says it won’t be tax-free, maybe a sale to AT&T would make sense.

The sub-prime mortgage issues caused EchoStar to have a bad quarter, according to third-quarter 2007 reports. DBS companies like DISH and DirecTV gain most traction in rural and suburban markets, where cable TV is provided by smaller MSO’s and rural MSO’s. It’s expensive to upgrade from an analog head-end to a 500-plus channel digital head-end supplying HDTV – and the network to provide it to the households. And the $400 set-top box only adds to the CAPEX. DirecTV and DISH are giving away equipment and can turn on your HDTV as soon as you buy one. And the ILECs are out selling their services too, helping DirecTV reach 16.8 million subs and DISH 13.5 million.

Does it make sense for Ma Bell to buy DISH? Not really. Their FTTN approach to triple and quad play bundles seems like the logical path to fight cable.

However, Ma Bell will be spending billions to hit only a portion of its client base. This is a solution to the rest of the country including Verizon territory. (Kind of like AT&T’s deal to offer Wild Blue internet access via satellite. BTW, where’s the Wild Blue/DISH bundle?)

My thoughts are that Ma Bell is running scared. The Aloha and Dobson buys.

Ingenio (pay per click). USinternetworking and Interwise. It looks like they are buying growth already. And this looks like the old AT&T!

Back in the 1990s, AT&T bought NCR, spun off Lucent, bought McCaw and Alaska Communications Systems. Then in 1997, AT&T bought TCI and Media One to become the largest cable TV provider in the United States. And then it unraveled. Heavy with debt and falling long-distance rates, AT&T started spinning off – wireless in an IPO and cable as AT&T Broadband and Liberty Media. By then it was upside down. Tell me this doesn’t look similar?

The company line is that AT&T is a Wireless company. Fine. Then Focus on that!

Think of companies that do things well. Bose. Starbucks. Southwest. Boeing.

What do they all have in common? They have a vision that comprises the one thing that they will Excel at, to exclude all else. Bose makes beautiful music; but audio only, no video. Starbucks used to be about The Coffee Experience. Southwest’s BHAG is Fly People Cheap. Boeing focuses on building the grandest planes in the air.

That’s how companies succeed. Have a Vision, BHAG, Grand Plan. And keep walking towards it – a step at a time. Not dancing or doing the jig or taking detours, but walking towards the goal (walking the Walk so to speak).

That’s focus. That’s how execution works.

Peter Radizeski is president of

RAD-INFO

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