DirecTV to Acquire Dish Network, Consolidating Major Pay-TV Providers

• On Monday, it was announced that EchoStar had sold its Dish TV provider and digital business Sling to competitor DirecTV.
• Dish agreed to pay a nominal fee of $1 to DirecTV, while assuming the company's net debt.
• The merger of DirecTV and Dish is predicted to occur in the last three months of 2025. As a result, the two companies will have a combined customer base of approximately 20 million.

EchoStar has sold its Dish TV provider and digital business Sling to DirecTV in a deal announced Monday, bringing together two of the largest pay-TV providers and causing EchoStar shares to plummet by 10%.

Dish will assume about $9.75 billion in debt and pay a nominal fee of $1 to DirecTV, according to a news release. The deal is contingent on consent from some of Dish's bondholders.

According to Reuters, the combined customer base of DirecTV and Dish is predicted to reach nearly 20 million by the end of the fourth quarter in 2025.

EchoStar CEO Hamid Akhavan stated on CNBC's "Squawk on the Street" Monday that it was the ideal moment to unite the companies in order to establish a company with the necessary strength to negotiate better deals with programmers and offer smaller, more consumer-friendly packages.

He stated that this game was likely a level playing field, allowing them to compete fairly with other market competitors.

The decline of the content distribution industry, according to Akhavan, has affected companies like Dish and DirecTV, which have struggled to keep up with newer technologies and wider reach of other platforms.

EchoStar couldn't fully support both its video distribution and core wireless internet businesses, and the merger will enable the company to focus all its resources on its core services.

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

For years, there have been rumors of a possible merger between Dish and DirecTV. In 2002, the two companies were close to a deal in which EchoStar would have acquired DirecTV from Hughes Electronics. However, the Federal Communications Commission intervened and the deal was ultimately shut down. At the time, EchoStar emerged victorious in a bidding war against Rupert Murdoch's News Corporation for DirecTV.

EchoStar, with a $2 billion debt payment and only $521 million in cash, faced the possibility of bankruptcy after failing to refinance some debt with bondholders.

EchoStar has secured enough capital for a bright future, but will not be making many big moves soon as it is still digesting the recent changes. The company will prioritize customer acquisition over expanding services, according to Akhavan.

He stated that they are just as competitive as anyone else when it comes to their offerings, including price, coverage, and quality.

This report was contributed to by Lillian Rizzo of CNBC, Alex Sherman of CNBC, and Reuters.