Is a Showtime - Orbit merger just hours away?

(Guest post by Keach Hagey, media reporter and co-author of Crane Country)

Argaam is reporting that officials from two of the region's major pay-TV providers, Orbit and Showtime, have agreed to merge. The officials reportedly met in Beirut last Sunday, and have appointed Credit Suisse to advise the deal.

We're expecting more information about this shortly - insiders at both companies are talking about an announcement within the hour - but for now, let's ponder what such a deal would mean.
When Abu Dhabi Media Company snapped up the regional rights to broadcast the English Premier League from Showtime last week, it was clear that the pay-TV game would be changing. As a free-to-air broadcaster, ADMC can't stick the games on its feeds, so it has to make deals with pay-TV broadcasters to keep the rights safely (and profitably) within walled gardens. Already, they have been talking about the possibility of putting rights on multiple pay-TV broadcasters in the same market. A merger would make this deal a no-brainer, and possibly increase the profitability for all involved.

But of course the roots of such a merger were in the ground long before last week's deal. Pay-TV has had a hard time in the Middle East, where free-to-air satellite TV overwhelmingly dominates the market (and is doing so even more lately, according to today's adspend figures). There have been many whispers of mergers between some combination of Orbit, Showtime and ART before, but if this one goes through -- as the increasingly loud whispers suggest it already has -- it will be evidence that at least two of the players were unable to break through the free-to-air static and make a real profits from subscriptions. The question, then, will be how will a newly consolidated entity compete, when free-to-air seems only to be getting more of the region's ad dollars, and more of its premium rights.

(Click here for the full (Arabic) story over at Argaam)