DirecTV Abandons Deal to Acquire Dish Amid Bondholder Opposition

Satellite TV giant DirecTV said it was abandoning a deal with Charlie Ergen’s EchoStar to acquire video distribution business Dish DBS, including Dish TV and Sling TV, due to opposition from bondholders to a debt exchange.

Under the complex landmark deal, which would have created the largest U.S. pay-TV distributor with more than 19 million subscribers, DirecTV was set to pay EchoStar $1, plus the assumption of debt.

“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 DirecTV CEO Bill Morrow in a statement. “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 deal had been decades in the making, but a group of Dish bondholders recently rejected a proposed debt-exchange offer that DirecTV had called a prerequisite for the transaction. The exchange at a discounted rate would have extended debt maturities but forced bondholders to accept a financial “haircut” of more than $1.5 billion.

DirecTV had forecast that the combination could generate cost synergies of at least $1 billion per year. The deal was seen as more likely to get regulatory approval amid the rise of streaming services and the decline of pay-TV subscribers due to cord-cutting.

EchoStar recently also unveiled “the successful completion of various transformative strategic transactions positioning its business for the further enhancement of its nationwide Open RAN 5G Network.” The transactions include around $5 billion in debt restructuring and the addition of $5.2 billion of “fresh capital” to its balance sheet.

DirecTV says that the scrapping of the Dish deal will not impact TPG’s deal to buy out the 70 percent of the company that it does not own from AT&T, and that the deal is still set to close next year.