U.S. satellite TV provider DirecTV on Thursday announced the termination of its agreement to acquire EchoStar’s satellite television business, which includes rival Dish TV. The decision was made following the failure of a proposed debt-exchange offer, which was a key component of the deal.
The collapse of the proposed merger between DirecTV and EchoStar has been attributed to challenges involving Dish/EchoStar and its bondholders. The complex deal would have combined the two entities into the largest U.S. pay-TV distributor, boasting over 19 million subscribers. DirecTV had agreed to pay EchoStar $1, while taking on Dish’s substantial debt of approximately $9.75 billion (€9.3bn). However, unresolved issues with Dish’s debt structure played a key role in derailing the merger.
DirecTV CEO Bill Morrow, said, “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. 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.”
The proposed merger between DirecTV and Dish, a topic of discussion for nearly two decades, had previously faced rejection from regulators. However, with the rise of intense competition from numerous streaming platforms, the regulatory environment had shifted, making approval of the merger more likely this time.