DirecTV clinches long-held deal to merge with Dish

Agreed to buy DirecTV on Monday EcosterIts satellite television business, which includes Dish TV, is capping decades of on-and-off negotiations to create the nation's largest pay-TV distributor with a combined 20 million subscribers.

The deal comes at a time when satellite TV service DirecTV and Dish are hemorrhaging market share to competitors like Netflix and Amazon's Prime Video, which have benefited from changing consumer habits and the growing popularity of streaming video.

DirecTV CEO Bill Morrow told Reuters that the combined pay TV companies would have the power to negotiate smaller programming packages tailored to consumer interests.

It plans to offer an enhanced viewer experience that makes it easier for customers to find their favorite shows – on a traditional TV channel or via streaming – and manage their subscriptions from one place.

“We believe consumers don't want to consolidate — or at least most consumers in the marketplace don't want to go out and manage all these multiple accounts of direct-to-consumer SVOD services,” Morrow said in an interview, citing streaming or subscription video-on-demand. Uses the word art for

As part of the two-step transaction, Dish will pay DirecTV $1 to buy DBS, a pay-TV business that includes Dish and Sling TV, while agreeing to assume about $9.75 billion in Dish's debt, the companies said in a statement. DISH and Directive are launching an exchange offer at discounted rates for debt to extend maturity.

For the deal to go through, Dish DBS would have to agree to take a haircut of about $1.57 billion in debt owed to borrowers. Through the exchange offer, Dish is trying to convince its bondholders to become holders of the merged entity.

The deal would provide a critical lifeline to Echostar, which was co-founded by telecoms entrepreneur Charlie Ergen and is currently saddled with more than $20 billion in debt. Echostar will get $2.5 billion in financing from Angelo Gordon, the credit unit of TPG's buyout firm TPG, and DirecTV to help pay off Dish's $2 billion bond in November.

Ecostar said the deal will help reduce its total consolidated debt by $11.7 billion and reduce its refinancing needs by $6.7 billion by 2026.

The deal provides a much-needed exit AT&Twhich is selling its 70% stake in DirecTV TPG for $7.6 billion. In 2021, AT&T signed a joint-venture deal with TPG, in which the private equity firm contributed about $1.8 billion in cash in exchange for a 30% stake in DirecTV, then valued at about $16 billion. AT&T agreed not to sell its stake in DirecTV for a three-year period, which expired on July 31.

AT&T has experienced declining distribution from its DirecTV business for several years. In the year ended Dec. 31, distributions from DirecTV came in at $2.04 billion, up from $2.65 billion a year earlier.

A merger between DirecTV and Dish is likely to test the appetite of regulators to allow consolidation in the television industry, although the media landscape has changed dramatically since the two sides first attempted a merger in 2002 that was struck down by the Federal Communications Commission and the US Department of Justice.

“We believe the timing is right in terms of the number of competitors that exist out there that will not change with the combination of Dish and Directive,” Morrow said.

On again, off again

DirecTV and Dish have had on-and-off talks over the years. Reuters reported in early September that DirecTV and Dish Networks had resumed merger talks.

The two pay-TV operators, which face rapidly declining subscriber numbers, are betting that a combination will help them compete better against pay-TV rivals such as Comcast's Xfinity, Charter Communications' Spectrum brand and YouTube TV and increase their capacity. To discuss with programmers.

For Englewood, Colorado-based Dish, the deal will allow the company to focus all of its investments on building out its 5G wireless network. Last year, Erzen, who co-founded both Dish and Echostar, struck a deal to merge the two companies.

DirecTV said it expects the tie-up with Dish to have the potential to generate at least $1 billion in cost synergies per year.

Morrow said the Dish-Directive combination would give Ergen a boost in creating the nation's fourth-largest wireless competitor. The deal is expected to close in the fourth quarter of 2025, subject to regulatory approval.

DirecTV, which surpassed 15 million subscribers when it agreed to a deal with TPG in 2021, now has more than 11 million subscribers.

In its latest quarterly report, Ecostar said its net pay-TV subscribers fell by 104,000. Dish TV has a total subscriber base of around 6.1 million.

Investment bank PJT Partners advised DirecTV on the deal, while Barclays advised TPG. JPMorgan advised Dish, while Bank of America, Evercore, LionTree and Morgan Stanley also advised DirecTV and TPG.