A strange twist of business fate may lead to Viacom becoming a suitor for EchoStar reports mergers and acquisitions specialist publication, MergerMarket.
The reason for the surprise is that Viacom and EchoStar are currently locked in legal action. EchoStar Satellite is claiming that Viacom is illegally trying to force EchoStar to buy Viacom-owned MTV and other cable channels at unfair prices in exchange for the right to carry 18 CBS-owned stations in 15 big-city markets. One effect of the dispute might be that 1.6m EchoStar subscribers will not get to see the Super Bowl this coming Sunday.
Researching the pieces, Rick Appin at MergerMarket took a sounding from the markets and found that they felt it was inevitable that EchoStar would be taken over due to large debts and a lack of programming.
Unnamed sources close to the situation said Viacom would only interested in acquiring cable programming, television and radio stations, broadcast properties and outdoors advertising. They saw the benefits of the merger being savings on distribution and fees. Once merged it would also bring Viacom the strength it feels it needs to compete against Rupert Murdoch. News Corp recently to a 34% stake in US satellite company, DirecTV.
There is also speculation that SBC Communications could be eyeing EchoStar, but the timing might right, with SBC having posted lower quarterly earnings on Monday.
Clearly the pursuit of EchoStar would not be a one horse race. One analyst felt others might enter the bidding fray, saying “What is likely to happen is the ignition of a bidding war with the likes of SBC, Viacom and even Disney making a play for it”