DirecTV confirmed it will terminate its acquisition of EchoStar's Dish Network pay-TV business by midnight November 22 if Dish's bondholders do not agree to a debt exchange.
DirecTV confirmed that it will terminate its proposed deal to acquire EchoStar's Dish Network pay-TV business in the coming days if Dish's bondholders do not agree to a debt exchange.
"A successful exchange was a condition for acquiring the Dish video business," a DirecTV spokesperson said in an emailed statement. "Given the outcome of the EchoStar exchange, DirecTV will have no choice but to terminate the acquisition of Dish by midnight on November 22."
In late September, DirecTV agreed to acquire EchoStar's struggling video distribution business, including Dish's satellite TV and Sling TV streaming units, for $1 plus the assumption of $9.75 billion of debt. If the deal goes through, the combined company will have about 18.07 million video subscribers and try to use its scale to create efficiencies and bring more heft to the negotiation table with programmers.
EchoStar's Dish DBS Corp. unit recently sweetened that debt exchange offer, but it was shot down by Dish bondholders on Tuesday (November 12).
A committee of Dish lenders called the deal one of the largest "engineered at the expense of creditors," Bloomberg reported Tuesday. "This group has roundly and resolutely rejected the latest proposed exchange offer," the committee added in the letter.
DirecTV has no plans to sweeten the debt-exchange proposal, and negotiations will now need to occur between EchoStar Chairman Charlie Ergen and Dish creditors, Bloomberg reported today.
Speaking yesterday on EchoStar's Q3 2024 earnings call, CEO Hamid Akhavan stressed that EchoStar can push ahead with its general plans plan even if the DBS debt exchange does not close.
"While we are hopeful that the DBS exchange will be successful, we now have a more robust foundation to operate and grow EchoStar's business independent of the exchange outcome," he said. "We certainly can develop the business regardless of the developments that happen at DBS."
EchoStar amplified that point today. "As mentioned on our recent earnings call, we have a more robust foundation to operate and grow EchoStar’s business, independent of the exchange outcome," EchoStar spokesperson Ted Wietecha said in an emailed statement. "EchoStar received $2.5 billion in financing in September to pay its upcoming debt maturity, and raised an additional $5.6 billion in financing as part of a series of financial transactions recently announced. These funds are unaffected by the DIRECTV transaction."
Alongside the proposed merger, TPG plans to acquire AT&T's 70% stake in DirecTV and assume full ownership of the company. AT&T and TPG teamed to spin out DirecTV in 2021. TPG and AT&T expect to close that deal in the second half of 2025. TPG's move to snap up AT&T's stake in DirecTV is not contingent on DirecTV's acquisition of Dish's video distribution business.
Editor's note: The story has been updated with a comment from EchoStar.
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