close
close

EchoStar sells Dish to DirecTV, merging major pay-TV providers

EchoStar sells Dish to DirecTV, merging major pay-TV providers

Hamid Akhavan, CEO of EchoStar, speaks on CNBC's “Squawk on the Street” on September 30, 2024.

CNBC

EchoStar is selling its Dish TV provider and digital business Sling to rival DirecTV in a deal announced Monday that brings together two of the largest pay-TV providers. Shares of EchoStar fell more than 11% on Monday.

DirecTV agreed to pay a $1 nominal fee for Dish. The deal calls for DirecTV to assume about $9.75 billion in debt and is contingent on approval from some of Dish's bondholders, a news release said.

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

“This was the right time to bring the companies together so we could create a company that ultimately had enough capacity to negotiate better deals with the programmers and bring smaller packages to market, more bite-sized packages that consumers demand. EchoStar CEO Hamid Akhavan told CNBC's “Squawk on the Street” on Monday.

“I think this was a scale game that kind of puts us on par with the competition in the market,” he said.

The content distribution industry as a whole is in sharp decline, Akhavan said, and distribution companies like Dish and DirecTV have fallen behind other platforms with newer technologies and greater reach.

He also said that EchoStar is unable to fully support both its video distribution and core wireless Internet businesses, and that this merger will allow the company to focus all of its resources on its core services.

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

The possibility of a merger between Dish and DirecTV has been rumored for decades. The companies were close to a deal in 2002 that would have seen EchoStar acquire DirecTV General Motors' Hughes Electronics before the Federal Communications Commission shut it down. At that time, EchoStar prevailed against Rupert Murdoch's News Corporation in a bidding war for DirecTV.

Since then, the satellite television industry has suffered several major setbacks as consumers have shifted to streaming services. With about $2 billion in debt looming and cash and cash equivalents of just $521 million as of June 30, EchoStar was increasingly facing bankruptcy, according to public filings. According to a Sept. 23 filing, the company recently attempted to refinance some debt but was unable to reach an agreement with bondholders.

Akhavan said EchoStar has secured enough capital for a bright future, but won't be making many big moves soon as the company is still digesting recent changes. He said the company will prioritize customer acquisition over expanding services.

“We are as competitive as anyone else in terms of our offerings, be it price, coverage or quality,” he said.

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

Don't miss these insights from CNBC PRO

Leave a Reply

Your email address will not be published. Required fields are marked *