Satellite TV giant DirecTV has terminated its contract with Charlie Ergen's Echostar and acquired rival Dish TV and other assets.
The partnership was supposed to create the country's largest pay-TV distribution company with a total of 20 million subscribers. As part of the deal, DirecTV was to pay Echostar $1 for its pay-TV business, called Dish DBS, which includes Dish and Sling, and for assuming Dish's approximately $9.75 billion in debt.
In addition, Dish's bondholders had to agree to take a haircut of approximately $1.57 billion on their debt and exchange that debt for new debt from the combined company at a discounted interest rate. Dish bondholders recently rejected the proposal.
“We closed the transaction because the proposed exchange terms were necessary to protect DirecTV's balance sheet and operational flexibility,” DirecTV CEO Bill Morrow said Thursday.
Moreau continued, “DirecTV is committed to pursuing innovative products that aggregate, curate, and deliver content tailored to customers' interests by providing customers with additional choice, flexibility, and control.” “We will continue to advance our mission.”
The CEO said the closing will take effect on Friday.
EchoStar did not immediately respond to a request for comment.
Axios first reported on the deal. Ends early on Thursday.
The proposed partnership, originally announced in September, was seen as a strategic move to consolidate the shrinking pay-TV market, which has been hit hard by the popularity of streaming.
It was also supposed to be a critical lifeline for Echostar, which was co-founded by telecommunications entrepreneur Mr. Ergen and currently has more than $20 billion in debt.
DirecTV and Dish have held talks on and off over the years. This is the second time that a merger between the two companies has failed.
The two companies attempted to merge in 2002 for $26 billion, but the deal was blocked by regulators in the George W. Bush administration over concerns that it would reduce competitiveness.
However, given the rapid decline of the satellite TV business, these concerns likely were not a factor this time.
