DirecTV and Dish TV agreed to merge in a historic deal announced on Monday. The merger still needs to be approved by regulators, but if it is it would bring together two of the biggest satellite TV providers in the business with a total of 20 million subscribers in the U.S., according to a report by The New York Times. However, it would also be a life-saving move for Dish’s parent company, EchoStar, which is deeply in debt and is approaching a major deadline.
The proposed merger would see DirecTV acquiring EchoStar’s entire TV business, which includes DishTV and the streaming service Sling TV. For the satellite business, that brings Dish’s 8.1 million users into the fold with DireTV’s 11 million users, but it also means DirecTV would assume Dish’s debt. That’s a total of $9.75 billion. Under the terms of the deal, DirecTV would only pay a symbolic one dollar for the acquisition, since it would be taking on the debt and the risk that comes with it.
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This could be a saving grace for EchoStar, as the company is obligated to make a $2 billion payment on its overall debt by Nov. 14. The company has a total of $20 billion in debt, and no way to pay it as far as business analysts can tell. Sadly, this most likely means there will be layoffs if the merger is completed. DirecTV executive Bill Morrow issued a statement on the deal, saying it would allow both companies “to work with programmers to realize our vision for the future of TV, which is to aggregate, curate, and distribute content tailored to customers’ interests, and to be better positioned to realize operating efficiencies while creating value for customers through additional investment.”
The press release also says that once combined, the two companies would “generate cost synergies of at least $ billion per annum,” which seems like another hint at layoffs. It notes that the two companies have lost “63 percent of their satellite customers since 2016,” and the outlook ahead looks just as bleak. The advent of streaming, satellite internet and other new technologies are a factor in pushing this older method out.
DirecTV was previously a part of AT&T, but in 2021 the communication giant sold 30 percent of the company to a private equity firm called TPG. TPG is now vying to purchase the remaining 70 percent of DirecTV for $7.6 billion. However, all of these acquisitions are subject to regulatory approval, which is not guaranteed. DirecTV and Dish tried to merge once before in 2002, but the U.S. Justice Department and the Federal Communications Commission blocked the deal, saying it was anti-competitive. The final decision on these deals is expected in late 2025.
