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DirecTV announces termination of deal to buy Dish satellite business

DirecTV says it's ending deal after Dish debt holders refused to accept loss.

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DirecTV is pulling out of an agreement to buy its satellite rival Dish after bondholders objected to terms of the deal. DirecTV issued an announcement last night saying "it has notified EchoStar of its election to terminate, effective as of 11:59 p.m., ET on Friday, November 22nd, 2024, the Equity Purchase Agreement (EPA) pursuant to which it had agreed to acquire EchoStar's video distribution business, Dish DBS." In the deal announced on September 30, DirecTV was going to buy the Dish satellite TV and Sling TV streaming business from EchoStar for a nominal fee of $1. DirecTV would have taken on $9.75 billion of Dish debt if the transaction moved ahead. The deal did not include the Dish Network cellular business. Dish bondholders quickly objected to terms requiring them to take a loss on the value of their debt. DirecTV had said Dish notes would be exchanged with "a reduced principal amount of DirecTV debt which will have terms and collateral that mirror DirecTV's existing secured debt." The principal amount would have been reduced by at least $1.568 billion. DirecTV last night said it is now exercising its right to terminate the acquisition because noteholders did not accept the exchange offer. "The termination of the Agreement follows Dish DBS noteholders' failure to agree to the proposed Exchange Debt Offer Terms issued by EchoStar, which was a condition of DirecTV's obligations to acquire Dish under the EPA," the press release said. DirecTV CEO Bill Morrow indicated his company wasn't willing to change the deal to satisfy Dish bondholders. "We have terminated the transaction because the proposed Exchange Terms were necessary to protect DirecTV's balance sheet and our operational flexibility," Morrow said.

AT&T still selling DirecTV stake

AT&T owns 70 percent of DirecTV but plans to sell its stake to private equity firm TPG, which owns the other 30 percent. DirecTV said this separate deal is still moving forward. "The termination of the Dish acquisition does not affect TPG's acquisition of the remaining 70 percent stake in DirecTV from AT&T, which is expected to close in the second half of 2025," DirecTV said. EchoStar was hoping to get rid of the declining satellite TV business and focus on its cellular ambitions. When the deal was announced on September 30, EchoStar said it would be able "to focus more clearly on enhancing and further deploying its nationwide 5G Open RAN wireless network." DirecTV and Dish tried to merge over two decades ago. The deal was scrapped after the US Department of Justice filed an antitrust lawsuit, saying the merger "would eliminate competition between the nation's two most significant direct broadcast satellite services." AT&T bought DirecTV for $48.5 billion in 2015 but lost nearly 10 million subscribers in the ensuing years before completing a spinoff in 2021. The subscriber losses continued after the spinoff; DirecTV lost 1.8 million subscribers in 2023, bringing it down to an estimated 11.3 million. EchoStar recently reported having 5.89 million Dish TV subscribers and 2.14 million Sling TV subscribers after the latest customer losses in the satellite division and customer gains for the Sling streaming service.