Investors cheer EchoStar/DirecTV ruling
NEW YORK — News that government regulators have rejected the merger of satcasters EchoStar and DirecTV moved stock prices up all over the pay TV sector on Friday, with cable operators among the biggest winners.Cable investors cheered the ruling, handed down by the Federal Communications Commission on Thursday. The decision effectively killed a deal that would have created a 17 million-subscriber satellite behemoth with the muscle to compete nationally with cable’s biggest players. In fact, EchoStar topper Charlie Ergen had long argued that the tie-up was necessary to put satcasters on an equal footing with their wired rivals — particularly in light of the pending multibillion-dollar union between Comcast and AT&T Broadband. Comcast shares spiked by 8.3% Friday to end the day at $20.02, and AT&T Broadband’s parent company, AT&T, was up 5.7% to $11.97. Other cablers benefited as well: Long Island-based Cablevision Systems climbed 7.7% to $7.56, Cox Communications rose 6% to $24.64 and AOL Time Warner, parent to No. 2 net Time Warner Cable, was up 3% to close at $11.79. U.S. shares of Blighty-based satcaster BSkyB also gained ground in the wake of the failed EchoStar-DirecTV deal. Speculation is flying on Wall Street that BSkyB parent News Corp. will move to acquire DirecTV, filling a major gap in the Aussie conglom’s global pay TV infrastructure. BSkyB was up more than 9% to finish at $48.15, while News Corp. climbed nearly 6% to $20.96. Even the failed merger partners themselves managed to have an up day Friday — helped at least in part by a surge in the broader market. EchoStar shares gained 1.8% to $17.28. Shares of DirecTV parent Hughes, benefitting from the News Corp. deal rumors, shot up 7.5% to $8.76.
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