Eighteen years ago, Matthew Cantor was part of the legal armada that opposed the combination of the nation's two satellite video providers. Now, amid fresh M&A speculation, Cantor is still talking about the risks of such a deal.

Recent published reports have indicated that AT&T Inc. is looking to sell all or part of its DIRECTV satellite video business. While potential interested buyers include private equity firms like Apollo Global Management and Platinum Equity, DISH Network Corp. Chairman Charlie Ergen said in August that he still sees a combination between DISH and DIRECTV as "inevitable."

Cantor, now a partner at Constantine Cannon LLP who specializes in antitrust litigation, notes that much has changed in the video market since 2002, when federal regulators blocked a deal between DIRECTV and DISH, which at the time operated as EchoStar Communications. But even with those changes, Cantor and industry analysts say regulators would still likely oppose a DISH/DIRECTV combination — at least for the time being.

Cantor noted that there are millions of Americans who remain unpassed by cable and for whom satellite video is their only pay TV option. Under Section 7 of the Clayton Act, any merger that is likely to substantially lessen competition "in any section of the country" is anticompetitive and can be blocked.

"You're talking about protecting competition in rural communities," Cantor said. "For those people, this would be a merger to monopoly."

Finding estimates on the precise number of U.S. households unpassed by cable is difficult, as most recent data focuses on broadband rather than video. Assuming cable broadband can be used as a proxy for cable video services, the NCTA - The Internet & Television Association and Bortz Media estimate that 90% of U.S. households have cable high-speed internet available, leaving 10% of American households without.

Neil Begley, a Moody's senior vice president, noted that some smaller cable companies recently have decided to drop video service while continuing to offer broadband.

"Smaller cable companies, in particular, are seeing really low penetration rates, and one should wonder whether those companies will continue to offer that [video] service," he said.

For instance, BELD Internet, a small broadband provider in Massachusetts, stopped offering cable television service in December 2019. And in June 2019, 3 Rivers Communications, a small Montana telecom services provider, similarly dropped video.

"Any of those customers would have no other option to go to anyone but DIRECTV or DISH," Begley said, noting that video streaming services like Netflix Inc. and even Hulu LLC are not a perfect replacement for linear pay TV services.

With that in mind, Begley has doubts a combination between DIRECTV and DISH, at this point, would pass regulatory muster.

"It's a question as to whether or not it's feasible in this environment that the government would allow them to combine," he said.

As a comparison, Begley pointed to the successful merger of Sirius and XM Satellite Radio Holdings Inc., the only two national satellite radio companies, in 2008.

"They were both on death's door … and so [regulators] allowed that transaction to go through," he said. While both DISH and DIRECTV have experienced significant subscriber declines in recent years, with AT&T losing 7 million video customers in the span of 2 years, Begley said neither is at risk of failing.

Cantor also thinks the two companies do not meet the U.S. Department of Justice's definition for a "failing firm" as neither are facing Chapter 7 liquidation.

"In order to qualify as a failing firm under the horizontal merger guidelines at the DOJ or Supreme Court precedent, you have to be a firm that is going bankrupt ... and there is no reasonable prospect of reorganization," Cantor said, adding that a company effectively has to be "dead in the water."

The Constantine Cannon partner, however, acknowledged that the lines around this defense have become somewhat "blurred," most recently with the Sprint/T-Mobile US Inc. merger. In that case, the court accepted the argument that T-Mobile and the long-beleaguered Sprint would make a stronger combined competitor against AT&T Inc. and Verizon Communications Inc.

"So they were weakened firms, not failing firms. The weakened firm defense, in my view as a practitioner, is a dangerous argument," Cantor said, adding that DISH and DIRECTV would face long odds in getting a deal approved.

For his part, BofA Securities analyst David Barden questioned whether the companies would be willing to risk a lengthy regulatory battle.

"While Republican administrations are typically more amenable to corporate tie-ups, the current administration already tried to block AT&T's acquisition of Time Warner, which was vertical in nature, and AT&T is very wary of attempting incremental deals with this DoJ as a result," Barden said in a research note.

Even if there is a change in administration after the November election, Barden said "it is not obvious to us that deal chances improve given a general, pro-consumer bias."

Although Begley does not foresee a successful DISH/DIRECTV combination in the near-term, he believes it could happen at some point.

"I would say, eventually, they would be able to [merge] based on the same concerns people had around Sirius and XM," he said. "But I think it's a little early just yet."