DirecTV is acquiring EchoStar’s video distribution business, including Dish TV and Sling TV, via a debt exchange transaction, ending years of talks between the two TV providers.
According to DirecTV, the combination of companies will benefit U.S. video consumers essentially by offering choice and creating more competition in a video landscape largely dominated by streaming services.
According to the companies, the merger aims to enhance consumer video options by offering smaller, more affordable programming packages and integrating multiple content sources. With increased scale, the combined company can better invest in improving streaming services while maximizing satellite platform efficiencies. It will continue to provide diverse programming, including local news. Additionally, the transaction allows EchoStar to focus on expanding its 5G Open RAN network, alleviating financial pressures, boosting competition in the wireless sector, and advancing satellite-to-device technologies through its Boost Mobile brand.
The companies are clearly trying their best to compete with the streaming market, with Dish launching its internet television service Sling TV in 2015. Similarly, DirecTV offers DirecTV Stream, a streaming TV service that launched under different branding in 2016. Dish also offers hybrid setup box (STB) that allows users to easily access broadcast media with all the entertainment options as its traditional broadcast STBs, as well as streaming content from all the top entertainment services that include RSNs, all from the same interface.
Still, the companies say the video distribution industry has become highly competitive, with streaming services from tech companies now dominating over traditional pay TV, resulting in the companies losing a combined 63% of their satellite customers since 2016. With U.S. pay TV penetration below 50%, this transaction aims to strengthen the financial profiles of DirecTV and EchoStar. By generating cost synergies and improving access to capital, both companies hope to have more flexibility for investments and reduced debt. EchoStar also wants to unlock more spectrum and operational flexibility through the deal.
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According to the 2024 CE Pro Brand Analysis, integrators tend to favor Dish for satellite TV services at 21%, compared to DirecTV at 17%.
Executives such as DirecTV CEO Bill Morrow says the highly competitive industry has essentially forced the merger, which is expected to result in a company that is better able to compete with streaming services.
“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,” Morrow says in a statement.
EchoStar President and CEO Hamid Akhavan says the deal is in the best interests of all stakeholders.
“With an improved financial profile, we will be better positioned to continue enhancing and deploying our nationwide 5G Open RAN wireless network,” Akhavan says in a statement. “This will provide U.S. wireless consumers with more choices and help to drive innovation at a faster pace. We expect Dish and EchoStar bondholders to benefit from two companies with stronger financial profiles and more sustainable capital structures.”
Per the acquisition agreement, DirecTV will acquire EchoStar’s video distribution business, including Dish TV and Sling TV, for $1, while assuming Dish DBS’s net debt. This deal includes a $9.75 billion Exchange Offer for Dish DBS notes. To proceed, the exchange must reduce the debt by at least $1.568 billion. TPG Angelo Gordon has provided $2.5 billion to refinance Dish DBS’s 2024 debt maturity. If the terms aren’t met, DirecTV can cancel the acquisition. Various regulatory approvals and a pre-closing reorganization are also required.
As part of the transaction, TPG Inc. will acquire from AT&T the remaining 70% stake in DirecTV that it does not already own. TPG will invest in DirecTV through TPG Capital, the firm’s U.S. and European private equity platform. The transaction between TPG and AT&T is expected to close in the second half of 2025, subject to customary closing conditions. Completion of this transaction is not contingent on DirecTV’s acquisition of Dish.
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