September 26, 2010
On September 27th, 2010, Google [GOOG - Google Inc. (NASDAQ)] will announced their intent to purchase 100% of Dish Network [DISH - DISH Network Corp. (NASDAQ)] for 19.1 billion dollars in cash. This is an even larger deal than the 2006 acquisition of YouTube for 1.6 billion dollars.
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What Is Dish Network?
Dish Network Corporation is the United States' third largest pay-tv provider, providing direct broadcast satellite service—including satellite television, audio programming, and interactive television services to approximately 14.337 million commercial and residential customers in the United States. Dish Network has approximately 24,500 employees, most of which are located within the U.S. The corporate office is based in Englewood, Colorado, though the postal designation of Englewood is used in the company’s mailing address.
An offspring of Echostar Satellite L.L.C., founded by Charles Ergen, his wife Candy and their friend Jim DeFranco as a satellite TV equipment distributor in 1980, DISH Network was officially branded in March 1996. This branding came after the successful launch of its first satellite, Echostar I in December 1995, and marked the beginning of the company's offering of subscription television services. The company has since launched numerous satellites, currently with 14 owned and leased satellites in its fleet.
As of January 2008, DISH Network split from Echostar -— each entity becoming a separate company. Echostar is the key technology partner to DISH Network, which focuses only on marketing and providing satellite television service.
As of 2010, the company competes primarily with satellite rival DirecTV and with cable television providers, but telecommunication companies’ development of fiber-optic lines has increasingly become competition for the company.
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Why Does Google Want Dish Network?
Google has been in negotiations with Dish Network to integrate the Internet into Dish Network’s satellite television receiver movie and entertainment search systems since approximately May of 2009.
During recent months, Dish Network’s EchoStar Corporation, a technology company that is the owner and maintainer of the satellite fleet for closely affiliated Dish Network has been trying, unsuccessfully, to integrate the Google applications into the new 922 series of receivers without much luck.
During a recent "Charlie Chat." a periodic program which gives Dish Network viewers direct access to Charles Ergen, CEO of Dish Network, via e-mail, telephone, and Skype connections, Ergen declared the new VIP922 receivers were "not powerful enough to handle the Google interface."
EchoStar also designs and manufactures set-top boxes to receive the Freeview broadcasts in the United Kingdom, as well as receivers for Bell TV in Canada.
EchoStar also is home to Sling Media, which designs and builds the Slingbox TV streaming device. EchoStar was formerly the parent company of Dish Network until the unit was spun off in December 2007.
By making Dish Network, along with their close affiliation, and continued working relationship with EchoStar Corporation, a member of the Google family, Google's unique team of software engineers will not only be able to overcome the shortcomings of the programmers at Echostar, but Google will also be able to gain additional insight into the viewing habits of millions of Dish Network subscribers, allowing them to share the information with their DoubleClick advertising affiliates, and place suggestive advertising on movie and other entertainment searches on both the screens of Dish Network subscribers, when they search for entertainment content using the VIP series of Dish Network receivers.
The ownership of Dish Network will also allow Google to place targeted advertising on the desktop computers of those who's computer shares the same network connection as the Dish Network subscribers receivers.
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Monopoly Concerns
Comcast, Verizon, AT&T, and Microsoft are displeased with the potential purchase, claiming the purchase of Dish Network by Google will give Google an unfair advantage. The anti-trust concerns are somewhat ironic considering all four companies have both criticized for anti competitive practices.
The purchase of Dish Network by Google may actually help complete the purchase of NBC by Comcast, as the purchase will give Comcast some additional resources to help diffuse concerns by both the Justice Department and Federal Communications regarding potential monopoly issues with Comcast's purchase of NBC.
Parker Brothers was not available for comment as of press time.
Spokespersons for all major broadcasting services expressed concerns stating they "think antitrust authorities should take a hard look at this deal and the potential implications."
Google addressed this concern, stating, "We believe this acquisition is extremely competitive, as it promotes a vibrant and healthy addition to both the online advertising and entertainment content delivery markets."
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Privacy Concerns
Both DoubleClick and Google track user information through cookies which are small files downloaded through your Web browser. DoubleClick has been criticized over user privacy. DoubleClick has responded with an extensive privacy policy statement. DoubleClick claims that the company does not retain personally identifying information across multiple Web sites. While no privacy concerns have been voiced over Dish Network’s use of cookies, Dish Network subscribers have been vocal about the functionality of the Dish Network website. Google’s programmers have promised to give the functionality of the Dish Network website top priority in the coming weeks.
Both Google and Dish Network track personally identifying information in some cases, which is why you can log into Google's Blogger and then switch to Google Docs or Google Reader without having to log in twice. The concern is that Google could potentially combine your Dish Network viewing history and your Google search history with tracking information for Web sites which used DoubleClick to serve their ads.
It is not known whether Google will modify the existing Dish Network customer portal to allow the use of the single Google username and password direct access to the Dish Network website.
In an effort to alley naysayers, Google, claims that they will use the additional advertising revenue to offset the recent runaway costs to Dish Network subscribers as much as possible. Google would not commit to making Dish Network basic subscriptions free to current subscribers, stating they "need more time to study the financial impact of this acquisition on both companies and determine how many of Dish Networks employees would be moved into the Google family."
Dish Network employees who are not retained by Google would have the first opportunity to apply for any new positions posted on the company’s website, but would have to go through the standard vetting and testing process used to weed out non Dish Network employees applying for the same jobs.
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Timeline
The proposed purchase of Dish Network by Google is expected to take several months at minimum, but Google is secure in the fact that they have significantly deeper pockets than Dish Network and their cash reserves will certainly allow them to be able to afford a larger group of attorneys to effect the purchase without any difficulty.