EchoStar sells Dish to DirecTV, bringing together major pay TV providers

EchoStar is selling its Dish TV provider and its Sling digital business to compete with DirecTV in a deal announced Monday that brings together two of the largest pay-TV providers, and sent EchoStar shares down 10%.

DirecTV agreed to pay a nominal fee of $1 for Dish. The deal will see DirecTV assume approximately $9.75 billion in debt and is contingent on the consent of some of Dish’s bondholders, according to a press release.

The deal is expected to close in the fourth quarter of 2025. Together, DirecTV and Dish will serve nearly 20 million customers, according to Reuters.

“It was the right time to bring the companies together so that we could create a company that would ultimately have enough capacity to negotiate better deals with programmers and bring smaller packages to market, smaller packages, which are what people are asking for. consumers,” EchoStar CEO Hamid Akhavan told CNBC’s “Squawk on the Street” on Monday.

“I think it was a scaling game that kind of puts us on a level playing field with competitors in the market,” he said.

The content distribution industry as a whole is in a major decline, Akhavan said, and distribution companies such as Dish and DirecTV have fallen behind other platforms with newer technology and broader reach. .

He also said that EchoStar was unable to fully support its video distribution and wireless Internet businesses, and that this merger would allow the company to devote all of its resources to its core services.

Also Monday, AT&T announced it would sell its entire 70% stake in DirecTV to a private equity firm TPG for $7.9 billion. The company sold 30% of its stake to TPG in 2021, then valued at $16.2 billion. AT&T originally purchased DirecTV in 2014 for $48.5 billion.

The possibility of a merger between Dish and DirecTV has been rumored for decades. Businesses were close to a deal in 2002 in which EchoStar acquired DirecTV from General engines” Hughes Electronics, before the Federal Communications Commission shut it down. At the time, EchoStar had beaten Rupert Murdoch’s News Corporation in a bidding war for DirecTV.

Since then, the satellite TV industry has suffered several hits as consumers have turned to streaming services. With a debt payment of about $2 billion looming and only $521 million in cash and cash equivalents as of June 30, according to public filings, EchoStar increasingly faced the prospect of bankruptcy. The company recently tried to refinance some of its debt, but failed to reach an agreement with bondholders, according to a deposit on September 23.

Akhavan said EchoStar has secured enough capital for a bright future, but it won’t make many big moves anytime soon because it’s still digesting the recent changes. He said the company would prioritize customer acquisition over service expansion.

“We’re as competitive as anyone in terms of our offerings, whether it’s price, coverage or quality,” he said.

— Lillian Rizzo and Alex Sherman of CNBC and Reuters contributed to this report.