DirecTV said Wednesday it will drop its bid to merge with EchoStar due to concerns over financing of the deal. The merger would have created the nation’s largest satellite TV service in an industry that launched just 30 years ago.
When the two companies said they would pursue a merger in late September, they struck a deal calling for DirecTV to acquire EchoStar’s video business—comprised of satellite-TV platform Dish TV and streaming pay TV service Sling TV—for $1 (not a typo) plus Dish’s net debt, valued at about $9.75 billion.
In a separate announcement on the same day, TPG, which AT&T has partnered with since 2021 to operate DirecTV’s satellite and streaming services as a joint venture, agreed to acquire the remaining 70% stake in DirecTV that it does not already own for $7.6 billion. The deal was expected to be formalized by the end of 2025. At the time of the original announcement, AT&T and TPG said their separate agreement would "not be affected by the merger."
Bondholders were turned off by the massive debt arrangements in the deal, which had been updated in late October, lowering DirecTV’s minimum loss on $8.9 billion of bonds to $1.5 billion. The deadline to accept the offer was close of business ET on Tuesday. A letter to DirecTV was delivered on Wednesday announcing that “this group has roundly and resolutely rejected the latest proposed exchange offer.”
“The debt holders are saying, ‘You need us to get the deal through, and we’re not going to do it at that much of a discount,’ ” New Street Research analyst Jonathan Chaplin told The Washington Post. "DirecTV is saying, ‘We’re paying full price for the asset and we don’t have any more discount to give.’ And Dish is saying, ‘We’re selling the asset for nothing, for a dollar, so we’ve got no more value to give, either.’ So there’s an impasse.”
A DirecTV spokesperson told the Post: “A successful [debt] exchange was a condition for acquiring the Dish video business. Given the outcome of the EchoStar exchange, DirecTV will have no choice but to terminate the acquisition of Dish by midnight Nov. 22.”
Based on its declining business in recent years, it appeared that EchoStar needed the deal more than DirecTV did. However, an EchoStar representative told the Post it has a “more robust foundation” that would allow the company to survive without a merger, noting that EchoStar secured $2.5 billion in financing to pay its upcoming debt maturity.
A combined DirecTV-Dish would have counted about 17 million subscribers, making it the nation’s largest pay TV service after Comcast, which has just under 13 million as of the end of September. DirecTV currently has about 11.3 million subscribers and Dish roughly 6.7 million subscribers.
