The Real Costs in TV Dealmaking

Pay television and broadband companies are increasingly consolidating to insulate themselves from slowing growth. But in doing so, they are inheriting a financial straitjacket while their potential competitors in Silicon Valley are cash-rich.

AT&T is awaiting regulatory approval to buy DirecTV, while Charter Communications recently struck a deal to buy Time Warner Cable and Bright House Networks. More recently, Dish Network has begun merger talks with T-Mobile USA, according to The Wall Street Journal . If the deals are consummated, the resulting companies will have more scale and, in some cases, more lines of business. But as the accompanying chart shows, they’ll also be carrying a very heavy debt load compared to the cash they generate every year.