Let's look at what is known:
1. DBS profits have been minimal due to the high costs of operating and maintaining a fleet of satellites, along with new subscriber acquisition costs (hardware, installation, advertising, etc.). Hell, VOOM DBS had a great product, but they weren't even close to making it profitable.
2. Competition in the video market is going to heat up now that Telcos are getting involved. Additionally, the average price of video services where there are at least two cable providers is, on average, 15% less. D* and E* need to be mindful of this when pricing their programming packs.
3. Telcos and Cable have a distinct advantage over DBS by their being able to provide the infamous Triple Play (voice, broadband, video) and other bundled discounts (wireless?).
4. The DBS market will no longer see double-digit growth and, by all indications, may very well contract. Conversely, quarterly churn rates are on the rise.
5. The competitive marketplace has changed in the past three years: DBS acquisition rates are increasing due to new technology; churn will continue to increase due to additional consumer choice; DBS will need to price their programming according to market conditions (won't be able to raise rates).
If DBS is to complete against Digital Cable and the Telcos then they had better find a way to reduce operating costs. Merger, buyout, partnership? Your guess is as good as mine, but I see something happening...and I don't see the government getting in the way of this one.
