Prospective Merger of DIRECTV and DISH? A Comparison of Values.

From CNN Money article

There have been recent reports that DIRECTV and DISH Network are considering a merger. Again.

The two companies tried to merge back in 2002. But the Federal Communications Commission (FCC) put an end to that deal.

Why try again? Why now?

It’s all because of Comcast’s recent deal to buy Time Warner Cable, for $45 Billion, which would combine the two biggest cable companies in the United States. This is big business!

Many believe the FCC will again block a merger of DIRECTV and DISH, because the two companies directly compete with each other. However, with consolidation occurring throughout the industry, this merger just might happen this time.

The bigger question should be: How successful would such a merger be?

This is a great place to stop and evaluate their values. But let’s first compare the basic facts about each company.

Comparing the Numbers

DIRECTV – #102 on the Fortune 500 list

• $29.7 billion in annual revenue (2012 data)
• 28,450 employees (according to CNN Money, but only 16,000 according to their website)
• 32 Million customers (according to their website, covering both U.S. and Latin America)

DISH Network – #189 on the Fortune 500 list

• $14.3 Billion in annual revenue (2012 data)
• 35,000 employees (according to CNN Money, but only 20,000 according to their website)
• 14 million customers (according to their website)

Clearly, this would not be a merger of equals. DIRECTV is the dominant player.

Yet, it was the chairman of DISH, Charlie Ergen, who approached the CEO of  DIRECTV, Mike White, to talk about a possible merger. The smaller company wants to join forces with the bigger company in a rapidly changing marketplace.

Now consider the stated values of these companies.

Comparing Values

DIRECTV – lists 6 values, with no further explanation.

• Leadership
• Innovation
• Decisiveness
• Agility
• Teamwork
• Integrity

Interesting, there’s an overarching theme of these 6 values, described as: “An entrepreneurial spirit is alive in all that we do”. In addition, they reference:

• Diverse talents
• Life experiences that generate ideas
• Pride and enthusiasm
• Innovative thinking

DISH Network – lists 3 values, with a clear explanation of each.

• Pride. We possess the integrity to set high goals and commitment to achieve the results. We believe pride is a personal commitment to do your best in everything you do.
• Adventure. We explore the uncharted course, we make mistakes and learn from them. We are willing to take risks and have the confidence to overcome obstacles along the way. Our goal is clear even if the path isn’t.
• Winning. There is no substitute for winning. We possess the discipline and the competitive spirit to make winning a reality.

Of interest, DISH also defines 3 attributes of what they are looking for in a potential hire:

• High Energy. This is clearly an integral part of their culture.
• Intelligence. They unmistakably want smart people.
• Need for Achievement. They distinctly identify a match to their value of “Winning”.

What will happen if these 2 firms merge?

Both DIRECTV and DISH share an entrepreneurial spirit, an innovative mindset, and a sense of pride. They both view their main competition as the cable industry (Comcast and Time Warner Cable), as well as the phone companies (AT&T and Verizon) that bundle video services with their phone and Internet packages.

In other words, as long as the focus is on beating the cable and phone companies, the merger looks very promising.

But look a little deeper in how their values play out and we find some concerning differences.

DIRECTV promotes teamwork.

DISH promotes individual discipline.

In support of their value of teamwork, DIRECTV even defines the business units by teams – Enterprise, Customer Care, and Home Services.

In the DISH Manifesto, it quickly becomes clear this company is made up of aggressive, highly competitive individuals. Consider the following statement:

“While we are all in this together, we are a meritocracy. You determine your success, and by the way the early birds get the best parking.”

If these two organizations merged together, there would definitely be a culture clash.

• DIRECTV employees would be trying to work as a team, while DISH people would be running off to “do their own thing”.
• DIRECTV employees would appreciate decisiveness that leads to clear direction, while DISH people would be trying new stuff and then changing direction without a thought, in order to find ways to overcome obstacles.

In the end, the highly competitive DISH people would likely prevail after the “merger dust” settles. It’s hard to work as a team if you do not have team players.

The next question would then be: Could a merged DIRECTV/DISH company compete effectively against the cable giants? The answer to that question would be strongly influenced by the set of values that the merged company would embrace.

How well do you think a merger would work between DIRECTV and DISH?