DirecTV is acquiring Dish and Sling, which it has been trying to build for years, to better compete with the dominant streaming services.
DirecTV announced Monday that it will acquire Dish TV and Sling TV from owner EchoStar in a debt exchange deal that includes paying $1 and assuming about $9.8 billion in debt.
A possible combination of DirecTV and Dish has long been rumored, with headlines about reported talks surfacing over the years. And when the two companies nearly merged more than two decades ago, the Federal Communications Commission blocked the $18.5 billion deal with the then-owner, citing antitrust concerns.
Since then, the pay TV market has changed significantly. As more consumers turn to big online streaming, demand for more traditional satellites continues to shrink. And while high-profile acquisitions have proven particularly difficult under the Biden-Harris administration, that could make regulators more likely to approve the DirecTV-Dish partnership this time around.
DirecTV said Monday that the deal will help it offer smaller content packages at lower prices to consumers, essentially providing a one-stop shopping experience for entertainment programming.
The hope is that this will pique the interest of people who have abandoned satellite video services and rely on streaming. DirecTV and Dish have collectively lost 63% of their satellite customers since 2016, the company said.
“DirecTV operates in a highly competitive video distribution industry,” DirecTV CEO Bill Morrow said in a statement. “With increased scale, we expect the integration of DirecTV and Dish to enable us to collaborate more with programmers to realize our vision for the future of television: aggregating, curating and delivering content tailored to customer interests. We are in a position to realize operational efficiencies while creating value for our customers through additional investment.”
This deal could be an important lifeline for EchoStar. The Colorado-based carrier is reportedly facing the prospect of bankruptcy as it continues to burn through cash and losses pile up.
In its most recent securities filing, Echostar revealed that it had just $521 million in “cash on hand.” And while the company expects cash flow to be negative for the rest of the year, it also has major debt payments looming, with more than $1.98 billion in debt maturing in November. It is also pointed out that
Hamid Akhavan, President and CEO of EchoStar, said: “With our improved financial position, we are better positioned to continue strengthening and deploying our nationwide 5G Open RAN radio network. We will be able to stand in a good position.” “This will give U.S. wireless consumers more choice and allow us to innovate at a faster pace.”
Eliminating Dish will allow EchoStar to focus on other areas, such as wireless carrier Boost Mobile.
“We are fighting to win in the wireless business, there is no question about that,” Akhaban said on the conference call, adding that he does not need to seek additional funding or financing in the future to reach his goals. He added that there may be.
Echostar stock fell more than 14% in midday trading Monday.
The DirecTV and Dish deal is targeted to close in the fourth quarter of 2025. But that depends on several factors, including regulatory approvals and bondholders writing off nearly $1.6 billion in Dish-related debt.
The combined company will be based in El Segundo, California.
“Regulatory approval is likely to exceed 50% given the opportunity for the combined company to improve its competitiveness and offer a variety of linear video packages and take a more aggressive stance in offering live streaming video products. ” Michael Rollins of Citi Investment Research wrote in a note to clients.
However, the analyst said, based on previous discussions with business executives and industry experts over the past several years, it remains unclear whether the Federal Communications Commission, Department of Justice and other regulators will grant the necessary approvals. He added that there is great uncertainty.
Shortly before DirecTV's announcement, AT&T announced it would sell its remaining shares in DirecTV to private equity firm TPG in a deal worth about $7.6 billion.
The move will end the telecom giant's remaining ties with the entertainment industry.
AT&T said Monday in a filing with the Securities and Exchange Commission that it will receive payments from TPG and DirecTV for the remaining 70% stake in the satellite TV company. This includes $1.7 billion in the second half of this year and $5.4 billion next year. The remaining amount is expected to be paid in 2029.
AT&T acquired DirectTV in 2015 for $48.5 billion, but after losing millions of customers, AT&T sold a 30% stake in the business to TPG for $16.25 billion in 2021.
The deal with AT&T is expected to close in the second half of 2025.
