DirecTV spikes Dish deal over debt swap exchange
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DirecTV terminated its planned acquisition of rival Dish Network on Thursday night following bondholders' rejection of a debt swap that the deal depended upon.
Why it matters: A merger between the two struggling satellite TV providers was seen as essential to the survival of both.
Zoom in: DirecTV informed Dish on Thursday night that it was terminating the deal, an individual familiar with the situation told Axios.
What they're saying: "While we believed a combination of DIRECTV and DISH would have benefitted all stakeholders, we have terminated the transaction because the proposed Exchange Terms were necessary to protect DIRECTV's balance sheet and our operational flexibility," said Bill Morrow, CEO of DIRECTV.
- "DIRECTV will advance our mission to aggregate, curate, and distribute content tailored to customers' interests by pursuing innovative products and providing customers with additional choice, flexibility, and control. We are well positioned for the future with a strong balance sheet and support from our long-term partner TPG."
Catch up quick: A deal between the longtime satellite TV rivals, which would have seen DirecTV acquire Dish from Echostar, was first announced in September.
- The deal called for DirecTV to pay a nominal $1 for equity and required Dish's bondholders to swap $9.75 billion of existing debt into roughly $8 billion of new bonds, essentially asking them to take a 20% haircut.
- An improved offer, which lowered the minimum loss on those bonds by around $70 million, was rejected earlier this week by a group of bondholders, Bloomberg reported earlier this month.
- DirecTV then informed Dish that the deal would be terminated on Nov. 22 if the two sides weren't able to resolve their impasse.
The big picture: A Dish-DirecTV combination would have formed the country's largest pay-TV company.
- The combined entity, which also would have included Dish's Sling TV streaming cable bundle, would have had 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.
Flashback: This is the second time a DirecTV-Dish merger failed to come to fruition.
- The two tried to combine in 2002 in a $26 billion deal, but was blocked by regulators in the George W. Bush administration over concerns it would reduce competition.
- Those same competition concerns likely would not have been a factor this time, given the decline in the satellite TV business.
