In the U.S. subscription TV business, the difference between 2024 and 2002 is that half the market has gone away. In 2002, the linear subscription TV business still had not reached its peak. In 2024, the business is universally recognized as being past its peak, and declining.
That creates a different regulatory context, as DirecTV and Dish now plan to merge, an action that will require antitrust review. Back in 2002, when the firms tried to combine, but the U.S. Department of Justice blocked the deal on antitrust concerns. At the time, the thinking was that preserving competition required the two satellite platforms to continue to compete.
Today, with the whole market in decline, that insistence on the value of platforms seems misplaced. Customers are deserting linear subscription TV on every platform, in favor of streaming services. And most of those streaming platforms that offer a linear service (virtual) are struggling in 2024, compared to 2020, when most services still were growing.
Nor, as a platform, do satellite services seem likely to challenge cable TV or telco platforms for what remains of the market, as growth is challenged in most segments of the market.
Where there still is some growth comes from sports-themed services such as Fubo, or bundled offers from mobile or fixed wireless ISPs.
Still, the point is that the U.S. linear subscription business is in decline since 2000. The peak appears to have been in 2002 or so.
For such reasons, many observers do not expect an antitrust challenge to the combination of DirecTV and Dish. Where antitrust enforcement might make sense in a growing market, it often does not make any sense in markets that are in decline.
When a market is in decline, overcapacity often exists, meaning there are too many suppliers for the existing demand. This can result in price wars and lower profit margins for all suppliers. While temporarily favorable for consumers, such conditions also mean weaker competitors must exit the market.
This can lead to higher quality products or services, since the survivors can afford to invest more.
Also, the remaining suppliers may be able to consolidate their operations, leading to cost savings and economies of scale, which can lead to improved consumer welfare.
While a reduction in suppliers may lead to higher prices in the short term, it can also result in more stable pricing and reduced price volatility over the longer term. Also, when markets are declining, supplier profitability is normally a big issue. Consolidation tends to help suppliers preserve their profit margins, which in turn allows them to continue to reinvest in the business, to an extent.
And market power is hard to exercise when markets are in decline. When demand for any product is declining, competitive pressures are applied by the sheer disappearance of demand.
