Can Murdoch Win on the Web?
He may spend $1 billion to push DirecTV into high-speed broadband — a risky bet on a hotly contested market that just might pay off — Since the late 1990s, satellite TV has created a powerful rival to the cable TV industry.
Context & Ripple Effects
Six days after the Financial Times reported DirecTV was closing in on a wireless strategy, Business Week floats the bigger version of that move: an unconfirmed plan under which Murdoch's News Corp could spend roughly $1 billion to put DirecTV into high-speed broadband. The rumor is unconfirmed, but it fits a confirmed pattern — since the late 1990s satellite TV has grown into a genuine rival to cable, and cable's counter-move of bundling internet access with video is exactly the gap this bet would close.
First-order effects
- DirecTV would stop selling video alone and bundle broadband with its satellite packages, attacking cable's main pricing weapon in the very market where cable currently holds the advantage.
Second-order effects
- Cable operators would face a competitor no longer limited by satellite's historical weakness — no pipe into the home — forcing them to defend bundles on price rather than availability.
Third-order effects
- If a $1 billion entry holds, pay-TV competition stops being about delivery technology and becomes a capital-intensity contest among platforms offering video plus connectivity, with only the deepest pockets staying in.
The trend: Satellite and cable distributors are converging into full telecommunications platforms, where bundling broadband decides who keeps the customer.