DirecTV, Dish merger deal falls apart

For years, a merger between satellite TV companies DirectTV and Dish has seemed likely and even inevitable, creating a massive US pay-TV provider that could compete in the digital age.

Nothing is inevitable, we were reminded late Thursday night when DirecTV reportedly informed Dish owner EchoStar that they would be walking away from the long-gestating deal.

The Wall Street Journal was the first to report the news. They say the decision came after bondholders representing around $10.7 billion of debt in Dish and its DBS subsidiary rejected a debt-exchange offer that was considered critical to the merger.

Per the WSJ, EchoStar said that it “respected the decision” and would continue running its pay-TV services as it had been, noting that recent financing arrangements made the merger less necessary.

DirecTV had initially agreed to buy Dish from EchoStar for a nominal $1 (plus taking on their debt) in September. However, cracks really started to show last week when both companies failed to get certain concessions from creditors needed to make the financials work.

The deal’s failure could be a critical setback for the satellite providers who were expected to pool their resources and negotiate from a stronger position for their TV programming. Had the deal gone through, it would have created an entity with around 20 million subscribers, giving it far more leverage than the competitors currently have (Dish and Sling combine for around 8 million subscribers, DirecTV has around 10 million, per analyst estimates).

Dish and Sling together have about 8 million subscribers, while DirecTV has about 10 million, according to analyst estimates.

Private equity firm TPG is still set to buy DirecTV outright from AT&T. They bought a 30% stake in the satellite provider in 2021.

[WSJ]