DirecTV agreed Monday to buy satellite rival Dish Network, ending decades of on-again, off-again negotiations and making the nation's largest pay-TV distribution company with a total of 20 million subscribers. A new company will be born.
Dish, owned by EchoStar, is billions of dollars in debt and facing the prospect of imminent bankruptcy.
As part of the two-step deal, DirecTV will acquire Echostar's television business, called Dish DBS, which includes Dish and Sling TV, for $1, while assuming about $9.75 billion in Dish's debt, the companies said. He says he agrees.
Dish and DirecTV are launching exchange offers at discounted interest rates on their debt to help extend maturities.
The partnership comes as streaming services like Netflix have grown in popularity, with both services experiencing a mass exodus of subscribers.
DirecTV CEO Bill Morrow told Reuters. The combined pay-TV company will have the authority to negotiate smaller programming packages tailored to consumer interests, it announced Monday.
Morrow plans to offer a streamlined viewing experience that allows customers to easily manage their subscriptions all from one place.
“We believe that consumers don't want to be an aggregator, or at least the majority of consumers in the market don't want to have to manage multiple direct-to-consumer SVOD accounts all together. Masu.” [subscription video-on-demand] service,” Moreau said.
For the deal to go through, DishDBS's debtors must agree to cut their debt by about $1.57 billion. Dish is trying to persuade bondholders to become shareholders in the combined company with a stock swap proposal.
The deal is a critical lifeline for Echostar, which was co-founded by telecommunications entrepreneur Charlie Ergen and currently has more than $20 billion in debt. EchoStar will receive a $2.5 billion loan from acquisition company TPG's credit arm Angelo Gordon and DirecTV to help repay Dish's $2 billion in debt due in November.
Echostar said the partnership will reduce total consolidated debt by $11.7 billion and reduce refinancing needs by $6.7 billion through 2026.
Other parts of the business, including more than $30 billion in radio spectrum investments, will continue to operate as independent companies.
Analyst Jeff Brodarczak said, “The merger was inevitable…Both are melting ice, and in much of the United States, much of the competition is increasingly distributed over the Internet. “After the merger, we will be able to navigate that environment well.” At Pivotal Research Group.
Echostar stock fell 13% in morning trading. After rising nearly 70% so far this year, Wrodarczak said the decline could be related to a lack of capital in the deal and investors potentially selling on the news. said.
AT&T stock was flat, trading at $21.90 per share.
The deal also provides a much-needed exit for AT&T, which will sell 70% of its DirecTV stock to TPG for $7.6 billion.
In 2021, AT&T entered into a joint venture agreement with TPG in which the private equity firm contributed about $1.8 billion in cash in exchange for 30% of DirecTV's stock, which was valued at about $16 billion at the time. AT&T had agreed not to sell its DirecTV stock for three years, which expires on July 31.
of debt. Denver Post via Getty Images
AT&T has faced declining distribution from its DirecTV business in recent years. DirecTV delivered $2.04 billion in the year ended Dec. 31, compared to $2.65 billion in the same period last year.
DirecTV has about 11 million U.S. subscribers, while Dish has about 8.1 million, according to analyst firm MoffettNathanson.
By comparison, media giant Comcast has about 13.2 million cable TV subscribers.
A merger between DirecTV and Dish will likely test the willingness of regulators to allow consolidation in the television industry, although the media landscape has changed dramatically since the two companies first attempted a merger in 2002. , rejected by the Federal Communications Commission and the Federal Communications Commission. Department of Justice.
“We believe now is the right time, given the amount of competition that remains unchanged by the combination of Dish and DirecTV,” Morrow said.
Craig Moffett, analyst at MoffettNathanson said The New York Times said it did not expect the government to object to the merger this time, given the weakened state of satellite television.
“After all, one is better than nothing,” Moffett said. “And neither can survive that long on their own. And to be fair, they Integration does not change the trajectory of the business.”
The transaction is expected to close in the fourth quarter of 2025, subject to regulatory approval.
Investment bank PJT Partners advised DirecTV on the deal, and Barclays advised TPG. JPMorgan advised Dish, and Bank of America, Evercore, LionTree and Morgan Stanley also advised DirecTV and TPG.
with post wire
