DirecTV to buy Dish, Sling TV in satellite TV merger

Satellite TV giant DirecTV and Charlie Ergen’s EchoStar said Monday they have closed a deal in which DirecTV will acquire EchoStar’s video distribution company Dish DBS, including Dish TV and Sling TV, in a debt swap transaction. DirecTV will pay EchoStar $1 plus the assumption of debt.

This landmark deal has been decades in the making, effectively merging satellite TV giants DirecTV and Dish. If approved by regulators, it would create the largest pay-TV provider in the US

DirecTV is owned by AT&T and 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).

Notably in connection with the deal, TPG said it had entered into a deal to acquire the 70 percent of DirecTV currently owned by AT&T. Once completed, AT&T will officially get out of the TV business after transferring WarnerMedia to Discovery two years ago.

The merger has been in the works for years, with the companies agreeing to merge back in 2001. The Justice Department scuttled that deal with an antitrust suit.

Of course, 2024 is very different from 2001. Cord-cutting has devastated the pay-TV industry, and satellite TV companies have been particularly hard hit. While cable companies have been able to focus on broadband internet and mobile services, Dish and DirecTV have continued to focus on television even as their subscriber base declines.

And streaming options like YouTube TV and Hulu with Live TV have expanded the competitive landscape. Both DirecTV and Dish have their own streaming bundles.

That competition was noted by the companies in their announcement in an effort to avoid regulatory issues.

“Streaming services owned by major technology companies and programmers now have subscription numbers that far exceed those of pay-TV distributors,” the press release said. “Content that has historically been the mainstay of traditional pay television – news, sports and entertainment – ​​is now available exclusively or airing for the first time on direct-to-consumer streaming services.”

The combination “will benefit U.S. video consumers by creating a more robust competitive edge in a video industry dominated by streaming services owned by big tech companies and programmers,” the companies said. “The transaction will provide consumers with compelling video options while enhancing EchoStar’s financial profile as it continues to enhance and deploy its nationwide 5G Open RAN wireless network.”

In 2020, Dish Chairman Charlie Ergen called a merger “inevitable,” and two years later argued that such a deal could happen in “the near term.” Apparently that time is now.

The question is whether regulators will intervene as they did twenty years ago, or allow satellite TV consolidation to take shape.

“DirecTV operates in a highly competitive video distribution industry,” said Bill Morrow, CEO of DirecTV. “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 to aggregate, curate and distribute content tailored to interests of customers, and to be better positioned to achieve operational efficiencies while creating value for customers through additional investments.”

Hamid Akhavan, president and CEO of EchoStar, added: “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 improving and deploying our nationwide 5G Open RAN wireless network. This will provide American wireless consumers with more choice and help 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.”