DirecTV has agreed to purchase EchoStar’s satellite television business, Dish TV, creating one of the largest pay-TV distributors in the United States with a total of 20 million subscribers. This deal comes at a time when traditional satellite TV services like DirecTV and Dish are losing market share to streaming services like Netflix and Amazon Prime Video. DirecTV’s CEO, Bill Morrow, believes that the combined company will have the ability to negotiate smaller programming packages and offer an improved viewer experience for subscribers.
In the two-step transaction, DirecTV will pay $1 to acquire Dish DBS, the pay-TV business that includes Dish and Sling TV, while taking on about $9.75 billion of Dish’s debt. Dish is launching an exchange offer to reduce the debt held by its debtholders by approximately $1.57 billion. The deal will help EchoStar, which co-founder Charlie Ergen, is struggling with more than $20 billion in debt. EchoStar will receive $2.5 billion in financing from TPG’s credit unit and DirecTV, assisting in paying off Dish’s $2 billion bond due in November.
The merger between DirecTV and Dish will also provide a much-needed exit for AT&T, which is selling its 70% stake in DirecTV to TPG for $7.6 billion. AT&T had previously entered into a joint venture agreement with TPG, but is divesting its stake in DirecTV due to declining distributions from the business. The merger between DirecTV and Dish may face scrutiny from regulators due to potential consolidation in the television industry.
DirecTV and Dish have engaged in merger talks on and off over the years, with discussions resuming recently. The two pay-TV operators are hoping that merging will help them compete against rivals and improve their negotiation power with programmers. For Dish, the deal will allow the company to focus on building out its 5G wireless network. The merger is expected to generate cost synergies of at least $1 billion annually and may also help Ergen create a significant wireless competitor.
The deal between DirecTV and Dish is expected to close in the fourth quarter of 2025, pending regulatory approvals. DirecTV, which had over 15 million subscribers at the time of the TPG deal in 2021, now has slightly above 11 million customers. In contrast, EchoStar reported a decline in net pay-TV subscribers, with a total of approximately 6.1 million Dish TV subscribers. Investment banks PJT Partners, Barclays, JPMorgan, Bank of America, Evercore, LionTree, and Morgan Stanley advised on the deal.
Overall, the merger between DirecTV and Dish represents a significant consolidation in the pay-TV industry and aims to position the combined company as a major player in the competitive media landscape. This deal comes as traditional satellite TV providers face challenges from streaming services and seek ways to adapt to changing consumer behavior and preferences. The transaction also highlights the ongoing evolution and transformation of the television industry as players seek to innovate and stay relevant in an increasingly digital world.
