DirecTV agrees to acquire rival Dish Network
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DirecTV has agreed to acquire Dish Network from EchoStar.
Why it matters: The combination would form the country's largest pay-TV company and is seen as essential for both companies' survival amid cord-cutting.
Zoom in: The deal calls for DirecTV to acquire Dish Network by paying $1 and assuming $9.75 billion of Dish's $20 billion debt.
- DirecTV, along with TPG Angelo Gordon, is also paying $2.5 billion to refinance Dish's debt.
- The deal is expected to close by the fourth quarter of 2025.
The intrigue: The deal's first contingency is DirecTV reducing Dish's debt by $1.6 billion. To achieve that, DirecTV will offer holders of $9.75 billion in Dish debt an exchange for DirecTV debt.
- The debt exchange is expected to take two to three weeks, DirecTV CEO Bill Morrow tells Axios.
- EchoStar faced a $2 billion debt payment on Dish in November. Execs admitted over the summer the company did not have that cash.
- Regulatory approval is another contingency, but it should be much easier now, given the shrinking size of the two satellite companies.
In a separate deal, TPG will buy AT&T's 70% stake in DirecTV for $7.6 billion. That is not contingent on the Dish deal closing.
State of play: Morrow says the proliferation of streaming services has created more choice for consumers.
- The expansion of broadband internet into rural areas — where satellite dishes had often been the only option for TV access — has also created more competition from those that can provide TV and internet bundles.
Flashback: Dish Network and DirecTV tried to merge in a $26 billion deal in 2002, but that was blocked by Bush administration regulators over concerns it would reduce competition.
- Rumors have persisted since that the two would join forces, and only got louder as both companies bled subscribers amid a wider erosion of TV subscribers.
The big picture: The deal immediately reshapes the pay-TV pecking order amid threats from cord-cutting and the rise of streaming .
- The combined entity, which also includes Dish's Sling TV streaming cable bundle, would have an estimated 20 million subscribers.
- Both have lost nearly half of their subscriber base since 2013, which is considered the high point of the pay-TV era. DirecTV had more than 20 million subscribers by itself that year.
The bottom line: This deal will be welcomed by the pay-TV industry.
Editor's note: This story has been corrected to state that DirecTV is acquiring $9.75 billion in Dish debt, not $20 billion.
