DirecTV terminates Dish merger

The merger that Dish Chairman Charlie Ergen has often called "inevitable" has died on the vine.

DirecTV has officially walked away from a merger with EchoStar's Dish pay-TV business, including its Dish satellite and Sling TV streaming services, after Dish bondholders rejected a sweetened debt exchange linked to the proposal.

"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 CEO Bill Morrow said in a statement issued Thursday. "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."

DirecTV said it will continue to invest in new streaming platforms and develop new packages that combine live TV with direct-to-consumer services.

The decision comes more than a week after DirecTV signaled that it would terminate the proposed acquisition of the Dish pay-TV business at 11:59 p.m. ET Friday (November 22) if the debt exchange – a key condition on the deal – was not successful.

The final nail in the deal's coffin comes nearly two months after DirecTV originally agreed to acquire EchoStar's struggling video distribution business for $1, plus the assumption of $9.75 billion of debt.

The combination was poised to create a pay-TV company with 18 million video subs with aims to create broad efficiencies and to use its subscriber scale to forge more advantageous carriage agreements with programmers.

This is the second time a merger of the two satellite TV giants came crashing down. EchoStar/Dish tried to combine in 2002, but the deal was blocked by regulators.

EchoStar, meanwhile, has previously stressed that its overall plans, which include a 5G network buildout, remain intact even if the DirecTV merger crumbled. EchoStar, which had been on a path to a potential bankruptcy, recently locked in some critical financial runway, including $2.5 billion in standalone financing and more than $5 billion in spectrum-backed financing. EchoStar believes that financial jolt will put the company in position to move ahead with its national open RAN 5G network buildout.

"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," EchoStar spokesperson Ted Wietecha said last week in a statement.

Wietecha issued this statement today. "DIRECTV notified us that they will terminate the purchase agreement to acquire the DISH video business at 11:59 p.m. ET on November 22. We respect their decision and will continue to deliver the excellent customer experience our pay-tv brands are known for. As mentioned on our recent earnings call, we have a more robust foundation to operate and grow EchoStar’s business, independent of this agreement. Last week EchoStar repaid its November debt maturity with funds received in September and also received an additional $5.6 billion through spectrum secured notes and equity issuances."

A separate transaction in which TPG will acquire AT&T's 70% stake in DirecTV and assume full ownership of the company will move forward because it was not contingent on DirecTV's now-failed acquisition of Dish's video distribution business. TPG and AT&T expect to close that deal in the second half of 2025. AT&T and TPG teamed to spin out DirecTV in 2021.

"We are well positioned for the future with a strong balance sheet and support from our long-term partner TPG," Morrow said.

A failure to investors, but hope for a new deal

"We are appalled that the deal has fallen apart, but not surprised," New Street Research analyst Jonathan Chaplin said in a research note issued Friday morning.

He believes all three parties – EchoStar, DirecTV and TPG – are worse off without a deal, "which means they have collectively failed their respective investors … Most simply, there is $4BN to $9BN in synergy value from the deal that evaporates because the three groups couldn't agree how to split the proceeds."

Chaplin also believes that a revised deal could emerge once litigation between EchoStar and bondholders is resolved. "Unfortunately, the litigation could take a while. If there is no resolution of the litigation before July 2026, the next forcing mechanism will be large DBS debt maturities in July and December 2026," Chaplin added.

Others believe that there's still a slim chance that the current deal could be saved since the formal termination of the agreement won't occur until late tonight.

"We have expected that there would be an element of brinksmanship to this negotiation, so it is no surprise that we are in the current situation," Adam Rhodes, senior research analyst at Octus, said in emailed comments.

Editor's note: The story has been updated with commentary from New Street Research and Octus and a statement from Dish issued Friday, November 22.