Shares of Dish Network parent EchoStar surged on heavy trading volume Friday on reports of a merger agreement could soon be reached between Dish and satellite TV rival DirecTV.With an hour left in the trading day, the stock was up 9% at $28.08.The combined entity would be the largest pay-TV provider in the U.S. with nearly 20 million subscribers. In 2021, AT&T spun off DirecTV into a privately held company, with private equity firm TPG buying a 30% stake. Dish and EchoStar merged last January.The Wall Street Journal and Bloomberg both reported that a combination was in advanced discussions, with a deal potentially being announced as soon as Monday. Both media outlets also cautioned that the talks are not certain to bear fruit.Reps from Dish and DirecTV did not immediately respond to Deadline’s requests for comment.EchoStar, which also has substantial telecom operations, is facing crippling debt repayments and has advised investors in recent months that it has been trying to renegotiate with creditors. While DirecTV, as the larger of the two, is expected to control the new entity, a merger could provide Dish and EchoStar with a financial lifeline. AT&T lost tens of billions on its 2015 acquisition of DirecTV, which coincided with the peak of pay-TV. The spinoff valued DirecTV at $16 billion.While it has shrunk from its previous stature, DirecTV remains a top-tier operator. Its recent 13-day impasse with Disney, which was resolved with a carriage renewal deal the day before the Emmys, served as a vivid reminder.Another question will be how Washington regulators regard the deal. The two companies have previously pursued a merger on multiple occasions, but have been shot down officially and also discouraged privately due to antitrust concerns. In today’s much different landscape, there would likely be a lower hurdle to approval given how diminished the overall pay-TV sector is. That said, a number of regulatory officials have largely held a skeptical view of M&A and corporate consolidation in recent years, though a new presidential administration could also provide a reset.The concept of the two major satellite players coming together has been in the ether for years. Charlie Ergen, who co-founded Dish and is now EchoStar’s chairman, publicly advanced the notion repeatedly in recent years.When a previous signal of a potential combo caused an uptick in EchoStar shares earlier this month, Citi Research noted that there was “still a high degree of industrial logic” to a merger. A deal would make sense as the companies “try to navigate the secular erosion of linear video subscriptions and improve scale to offer a streaming alternative.”Craig Moffett of MoffettNathanson sees a much higher likelihood of a deal passing regulatory muster today, compared with a previous media era. Even if it were to prevail, though, the analyst has reservations. Synergies, for example, are limited, he argued in a note to clients. “We are skeptical about pick-and-choose synergies in programming agreements,” for example, Moffett wrote. “A merger here has been anticipated for decades; protections for affiliates are therefore likely already anticipated in carriage agreements.”
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