After decades of flirting with a merger, the country’s two largest TV providers have reached an agreement to join forces in a bid to survive in a broadcast industry dominated by tech firms and network-owned streaming services.
DirecTV announced Monday that it will buy Dish and Sling TV from EchoStar for $1 while assuming $9.75 billion in corporate debt.
The satellite companies, under separate corporate umbrellas, first tried to merge in 2002 when EchoStar tried to buy DirecTV from then-owner Hughes Electronics Corporation. But the deal collapsed after the Federal Communications Commission voted to block the deal and the Justice Department sued to block it, arguing that the merger would create TV independence in parts of the country where cable television did not exist.
At the time, EchoStar had about 7.5 million subscribers and DirecTV had 10.9 million subscribers. By 2016, DirecTV had more than doubled its customer base to 25.5 million subscribers. But as streaming services began to dominate the TV space and other satellite companies, such as Elon Musk’s Starlink, entered the picture, the satellite TV business declined.
Today, the two companies boast the same number of customers as they did when regulators finalized their merger more than two decades ago—EchoStar reported about 8 million subscribers as of June and analysts estimate DirecTV’s subscribers at 11 million—but . the rise of other competitors means that integration is now more about survival than violence.
“DirecTV operates in a highly competitive video distribution industry,” said Bill Morrow, the company’s CEO, in a statement announcing the deal. “To a large extent, we expect that the combined DirecTV and Dish will be better able to work with broadcasters to realize our vision for the future of TV, which is to aggregate, filter, and distribute content that is tailored to the interests of customers, and to be better. is positioned to realize operational efficiencies while creating customer value through additional investment.”
As part of the deal, AT&T, which owns 70 percent of DirecTV, agreed to sell its shares to TPG, the private equity firm that owns the remaining 30 percent of the company, for $7.6 billion.
The deal still has to be approved by federal regulators, who under President Joe Biden have been more active in antitrust cases.
Statements from company executives announcing the deal emphasized that the merger would increase, rather than harm, competition for both television network and wireless network customers.
“This will give US wireless consumers more choices and help drive innovation at a faster pace,” Hamid Akhavan, CEO of EchoStar, said in a statement. “We expect DISH and EchoStar bondholders to benefit from two companies with strong financial profiles and stable capital structures.”
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