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(Bloomberg) -- DirecTV and Dish have agreed to combine in a deal that will create the biggest pay-TV provider in the US with about 18 million subscribers.
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Under the terms of the transaction, DirecTV will acquire Dish TV and Sling TV from EchoStar Corp. for a nominal consideration of $1 plus the assumption of about $9.75 billion of debt, according to a statement on Monday that confirmed previous Bloomberg News reporting.
The deal is contingent upon Dish’s bondholders agreeing to take a haircut on the principal amount of the company’s debt of at least $1.568 billion, the statement shows.
DirecTV is owned by AT&T Inc. and joint-venture partner TPG Inc. In connection with Monday’s deal, TPG will acquire the 70% stake in DirecTV that it doesn’t already hold from AT&T in a $7.6 billion in cash transaction.
EchoStar shares closed down 11% to $24.82 on Monday. AT&T shares were little changed at $22.
On and Off
DirecTV and Dish have flirted with merging on and off for two decades. While US regulators sued in 2002 to block a previous attempt to combine, the TV landscape has changed dramatically since then.
Twenty years ago, satellite providers brought TV to rural areas where cable wasn’t available. Today, many of those places have access to broadband internet and aren’t as reliant on satellite TV.
At the same time, the rise of popular streaming services from the likes of Netflix Inc. and Amazon.com Inc.’s Prime Video has eaten into the pay-TV industry’s revenues as tens of millions of consumers have canceled their services.
The shift has hit satellite TV providers harder than cable companies, which have found success offering internet service to consumers. Together Dish and DirecTV have lost 63% of their satellite customers since 2016, the companies said in the statement. Nearly 30% of that loss of their user base, or 6 million subscribers, has been since the start of 2022, according to data compiled by Bloomberg Intelligence analyst Geetha Ranganathan.
Amazon and Netflix offer so much competition for subscribers, a Dish-DirecTV merger shouldn’t be a regulatory problem, DirecTV Chief Executive Officer Bill Morrow said on a call with investors.
DirecTV and Dish are primarily competing against each other in areas that lack robust broadband coverage and where switching to streaming services is not easy, Morrow said. He said he hopes regulators “come to the same conclusion as us: There’s not going to be a loss of competition by bringing two satellite TV companies together.”