Satellite TV giant DirecTV and Charlie Ergen’s EchoStar said Monday that they cut a deal under which DirecTV will acquire EchoStar’s video distribution business Dish DBS, including Dish TV and Sling TV, through a debt exchange transaction. DirecTV will pay EchoStar $1 plus the assumption of debt.The landmark deal has been decades in the making, effectively seeing satellite TV giants DirecTV and Dish merge merge. If approved by regulators, it would create the largest pay TV provider in the U.S.DirecTV is owned by AT&T and the private equity firm TPG, while EchoStar is publicly traded. Combined, the companies would have about 20 million pay TV subscribers, millions more than any other pay TV company (Charter and Comcast each have just over 12 million). DirecTV estimates that the combination has the potential to generate cost synergies of at least $1 billion per year.Notably, TPG also said that it cut a deal to acquire the 70 percent of DirecTV currently owned by AT&T. Once completed, AT&T will officially be out of the TV business, after spinning out WarnerMedia to Discovery two years ago. While they will no longer be owners, however, Bill Morrow, CEO of DirecTV, said the company will still have “an ongoing commercial relationship” with AT&T around the sale of other services.The merger has been years in the making, with the companies previously agreeing to merge back in 2001. The Department of Justice scuttled that deal with an antitrust suit.2024, of course, is a far cry from 2001. Cord-cutting has ravaged the pay TV business, and satellite TV companies have been hit particularly hard. While cable companies have been able to pivot to broadband internet and mobile services, Dish and DirecTV have remained focused on TV, even as the number of subscribers dwindles.And streaming options like YouTube TV and Hulu With Live TV have added to the competitive landscape. Both DirecTV and Dish have streaming bundles of their own.That competition was noted by the companies in their announcement in a bid to preempt regulatory questions.“Streaming services owned by large tech companies and programmers now have subscription numbers that far exceed those of pay TV distributors,” per the release. “Content that was historically the mainstay of traditional pay TV — news, sports, and entertainment — is now available exclusively or first-run on direct-to-consumer streaming services.”The combination “will benefit U.S. video consumers by creating a more robust competitive force in a video industry dominated by streaming services owned by large tech companies and programmers,” the companies said. “The transaction will provide consumers with compelling video options while separately improving EchoStar’s financial profile as it continues to enhance and further deploy its nationwide 5G Open RAN wireless network.”Back in 2020, Dish chairman Ergen framed a merger as “inevitable,” and two years later he argued such a deal could happen in the “near term.” That time, apparently, is now.The question is whether regulators will step in as they did two decades ago, or let the satellite TV consolidation take shape.One of the goals as a merged company is to be able to offer smaller packages at lower price points, “which is exactly what the consumers have told us that they want,” Morrow said on a call following the announcement. This follows the deal DirecTV struck with Disney earlier this month, which saw the offering of slimmer, genre-based packages after a carriage dispute.“DirecTV operates in a highly competitive video distribution industry,” 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.”Added EchoStar president and CEO Hamid Akhavan: “This agreement is in the best interests of EchoStar’s customers, shareholders, bondholders, employees, and partners. With an improved financial profile, we will be better positioned to continue enhancing and deploying our nationwide 5G Open RAN wireless network. 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.”If all moves forward as planned, the transaction is expected to close in the fourth quarter of 2025.
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