Long-time satellite TV opponents are set to merge. DirecTV has announced a deal with Dish Network (Dish) parent company, EchoStar, to acquire Dish, consequently creating the U.S.’ largest pay-TV provider with around 18 million subscribers.
As part of the purchase agreement, DirecTV will take over EchoStar’s video distribution business, which includes Dish TV and Sling TV, for a nominal fee of USD 1, along with approximately USD 9.75 billion in debt.
The companies expect the deal to close in Q4 2025 following regulatory approvals, including antitrust clearance. Analysts expect a DirecTV-Dish combination to win the approvals, given the dramatic decline in the traditional pay-TV business as consumers shift their preference to streaming services.
A Comeback for Satellite TV
Satellite TV viewership was at its peak in 2014, reaching around 34 million subscribers. However, this has declined steadily due to the growing popularity of online streaming. Consequently, DirecTV and Dish have seen a combined loss of 63% of their satellite customers since 2016.
Analysts have noted that the “odds of a combined DirecTV-Dish service becoming profitable and growing its subscriber base is unlikely,” but they also expect that the “newly-enlarged DirecTV will be far more capable of forcing smaller, genre-based bundles.”
DirecTV CEO, Bill Morrow, stated that the mega-merger will enhance their scale, making it easier to negotiate with programmers for more affordable packages.
“We will be able to provide customers with a different kind of choice with better value, where they can choose the content of their choice,” Morrow remarked during an analysts’ call.
Merger Benefits, Tainted with Reservations
Morrow added that the merger “will allow us [DirecTV] to have a stronger financial profile and more opportunities to invest in this concept that we have about providing a simple one-stop service to consumers.”
For EchoStar, this deal presents an opportunity to avoid bankruptcy and reduce the risk of delayed payments from Dish to programmers. The company will secure USD 2.5 billion in financing to help settle Dish’s USD 2 billion bond, which is due in November 2024.
While a deal would give the satellite TV giants more time, analysts argued that USD 1 billion in synergies would only amount to a life extension of about 15 months, as the combined EBITDA of Dish and DirecTV has declined by USD 825 million over the past year.
S&P forecasts that EBITDA margins will stay at, or above, 25% through 2028, due to the operational efficiencies gained from the merger.
In the past, AT&T acquired DirecTV for USD 48.5 billion, however, following the loss of millions of subscribers, the company sold a 30% stake in the satellite service to TPG in 2021.
Amidst the merger between DirectTV and Dish, AT&T is “cutting the cord” on DirecTV, selling its remaining stake for USD 7.6 billion to TPG.
Also Read: DirecTV Competes in Broadband Market with No Fiber Network
