DirecTV And Dish To Merge, Creating Pay-TV Giant

DirecTV is acquiring satellite rival Dish Network, creating by far the largest U.S. pay-TV operator.

The two satellite companies, which have struggled in recent years due to cord-cutting and their innate inability to offer broadband services, have discussed coming together several times over the years.

DirecTV said the deal, which is structured as a debt exchange with Dish parent EchoStar, will yield $1 billion in annual cost savings. The combined firm will have more than 19 million subscribers, or about one-quarter of the total U.S. market.

Along with the acquisition news, the companies announced that private equity firm TPG is acquiring the 70% of DirecTV that it does not currently own, paying $7.6 billion in multiple installments through 2029. In 2021, AT&T spun off DirecTV into a privately held company, with TPG coming aboard as a 30% stakeholder. The six-year period during which AT&T owned DirecTV produced tens of billions of losses for shareholders, overlapping with the ill-fated 2018 acquisition of Time Warner for $85 billion. In 2022, the Time Warner portfolio, operating as WarnerMedia, combined with Discovery in a $43 billion merger creating Warner Bros. Discovery.

Dish merged last January with EchoStar, its corporate cousin in the wireless business. Across Dish’s satellite footprint and the internet-based Sling TV platform, EchoStar has a bit more than 8 million video customers. DirecTV has 11 million, according to recent estimates from researchers and Wall Street analysts, spanning satellite, legacy cable and the internet service DirecTV Stream.

Regulators will now review the proposed deal, which the companies expect to close in the fourth quarter of 2025. In the past, attempts to bring together the two satellite firms have been scuttled at various stages due to regulatory concerns, but today’s pay-TV landscape is far more fragmented and the point of access for video no longer relies on a physical cable. Still, the resulting entity would control a large chunk of the market, easily surpassing current leader Charter Communications, which has 12.7 million residential video customers.

Washington agencies have taken a skeptical line on a number of M&A deals in recent years, though the presidential administration is set to change in January, signaling a new regulatory era. Also, while the DirecTV-Dish combination would create a pay-TV giant, it would also enable EchoStar to continue its plans to offer a wireless rival to AT&T, Verizon and T-Mobile, enhancing competition in that industry.

While the satellite companies have declined from their heyday, each remains a top-tier distributor, with DirecTV’s clout revealed in its recent standoff with Disney. The carriage impasse at the start of September continued for 13 days, even through the start of the NFL season. In the end, the companies said they landed on a compromise that will enable DirecTV to offer smaller, cheaper bundles of TV services, something they say customers are increasingly looking for as the overall cost of TV and streaming keeps rising. Along with a 2023 blackout between Charter’s Spectrum and Disney, the situation put the traditional pay bundle under a microscope.

The acquisition offers a dramatic financial rescue for EchoStar, which has more than $20 billion in debt and was headed toward potential bankruptcy. It will receive $2.5 billion of financing to help pay off Dish’s $2 billion bond coming due in November. EchoStar said the deal will help cut its total debt by $11.7 billion and lower its refinancing needs through 2026 by $6.7 billion. The transaction calls for a dollar to be paid by DirecTV, with the primary cost being the assumption of debt.

“DirecTV operates in a highly competitive video distribution industry,” DirecTV CEO Bill Morrow said. “With greater scale, we expect a combined DirecTV and Dish will be better able to work with programmers to realize our vision for the future of TV, which is to aggregate, curate, and distribute content tailored to customers’ interests, and to be better positioned to realize operating efficiencies while creating value for customers through additional investment.”

EchoStar CEO Hamid Akhavan said the deal is “in the best interests of EchoStar’s customers, shareholders, bondholders, employees, and partners.” As a result of it, he added, “we expect Dish and EchoStar bondholders to benefit from two companies with stronger financial profiles and more sustainable capital structures.”

Shares in EchoStar and AT&T each rose a fraction in pre-market trading.

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