Satellite TV giant DirecTV and Charlie Ergen's EchoStar announced Monday that DirecTV has entered into a deal to acquire EchoStar's video distribution business, DishDBS (which includes DishTV and SlingTV), through a debt exchange transaction. DirecTV will pay EchoStar $1 plus assumption of debt.
The landmark agreement, decades in the making, effectively merges satellite TV giants DirecTV and Dish. If approved by regulators, it would create the largest pay-TV provider in the United States.
DirecTV is owned by AT&T and private equity firm TPG, and EchoStar is publicly traded. Together, the companies have about 20 million pay-TV subscribers, millions more than any other pay-TV company (Charter and Comcast each have just over 12 million subscribers). DirecTV estimates that the combination could generate cost synergies of at least $1 billion annually.
Notably, TPG also said it had entered into a deal to acquire 70 percent of the DirecTV stock currently owned by AT&T. Once completed, AT&T will officially exit the television business after spinning out WarnerMedia to Discovery two years ago. However, although the two companies will no longer be owners, DirecTV CEO Bill Morrow said the company will continue to have an “ongoing commercial relationship” with AT&T for the sale of other services.
The merger took years, and although the companies had agreed to the merger in 2001, the Justice Department threw out the deal in an antitrust case.
Of course, 2024 will be very different from 2001. Cord-cutting has devastated the pay-TV business, with satellite TV companies particularly hard hit. While cable companies have been able to pivot to broadband Internet and mobile services, Dish and DirecTV remain focused on television despite declining subscriber numbers.
Additionally, streaming options like YouTube TV and Hulu with Live TV have added to the competitive landscape. DirecTV and Dish both have their own streaming bundles.
Both companies highlighted the competition in their announcements, pre-empting regulatory questions.
“The number of subscribers to streaming services owned by major technology companies and programmers far exceeds the number of subscribers to pay-TV distribution companies,” according to the release. “Content that has historically been the mainstay of traditional pay TV, such as news, sports and entertainment, is now available exclusively or on first broadcast on direct-to-consumer streaming services.”
The companies said the combination “will benefit U.S. video consumers by creating a stronger competitive edge in a video industry dominated by streaming services owned by big technology companies and programmers.” “This transaction provides consumers with attractive video options while separately improving EchoStar's financial profile as it continues to strengthen and further deploy its nationwide 5G Open RAN wireless network. ”
In 2020, Dish Chairman Charlie Ergen claimed a merger was “inevitable,” and two years later claimed that such a merger could happen “in the near future.” Apparently, that time is now.
The question is whether regulators will step in, as they did 20 years ago, or whether satellite TV integration will take shape.
One of the combined company's goals is to be able to offer smaller packages at lower price points, “exactly what consumers want,” Moreau said in a phone call after the announcement. spoke. This follows a deal DirecTV struck with Disney earlier this month to offer leaner, genre-based packages after a shipping dispute.
“DirecTV operates in a highly competitive video distribution industry,” Morrow said. “With increased scale, we expect the integration of DirecTV and Dish to enable us to collaborate more with programmers to realize our vision for the future of television: aggregating, curating and delivering content tailored to customer interests. We are in a position to realize operational efficiencies while creating value for our customers through additional investment.”
Hamid Akhavan, President and CEO of EchoStar, added: Our improved financial position will help us continue to strengthen and deploy our nationwide 5G open RAN wireless network. This will give U.S. wireless consumers more choice and allow us to innovate 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 goes according to plan, the transaction is expected to close in the fourth quarter of 2025.
Caitlin Huston contributed to this report.
