DirecTV has announced its plans to acquire EchoStar’s video distribution business, which includes their longtime satellite television rivals Dish TV and Sling TV. The acquisition will be done through a debt-exchange transaction, as DirecTV aims to remain competitive with online streaming television services.
This move comes after a similar deal to merge the two companies was blocked in 2002 due to antitrust concerns raised by the U.S. Federal Trade Commission.
DirecTV acknowledges the massive transformation in the video-distribution industry, which is now dominated by streaming services owned by large tech companies and programmers. The subscription numbers of these streaming services far exceed those of pay TV distributors. They cite services like Google’s YouTube TV, Hulu Plus Live TV, Philo, and Fubo TV, which have gained popularity by offering consumers exclusive or direct-to-consumer content that was once only available through traditional pay TV.
EchoStar, which owns the popular streaming television service Sling TV, will also be acquired by DirecTV. Currently, DirecTV offers a streaming-only option in addition to its traditional satellite television service.
The acquisition aims to bring together DirecTV’s and Dish’s content offerings, enabling them to offer smaller, more affordable content packages. It will also help in improving their streaming services and enhancing EchoStar’s financial profile, according to the companies’ statement.
DirecTV’s CEO, Bill Morrow, emphasizes that this deal will facilitate better collaboration with content programmers, resulting in more tailored and cost-effective content packages for customers. He also states that with greater scale, the combined DirecTV and Dish will be better positioned to aggregate, curate, and distribute content that matches customers’ interests, while also realizing operating efficiencies and creating value for customers through additional investment.
The agreement is expected to benefit EchoStar as well, particularly in expanding its 5G wireless network and developing new satellite-based services. With the debt burden reduced by approximately $11.7 billion, the company will have more flexibility to grow.
Analysts project that DirecTV will generate over $1 billion annually in cost synergies by sharing infrastructure and reducing operating costs. The combined entity will continue to offer a diverse array of programming, including local news, sports, and entertainment, solidifying its position as a key player in the traditional pay TV market.
The transaction is subject to regulatory approval and other closing conditions, including the successful exchange of Dish DBS notes. It is expected to close by late 2025.
AT&T, the parent company of DirecTV, is also selling its 70 percent stake in DirecTV to TPG Inc., a key stakeholder in DirecTV, for $7.6 billion. This comes after a joint-venture agreement between AT&T and TPG was signed in 2021, with TPG contributing $1.8 billion in cash for a 30 percent stake in DirecTV.
Representatives from TPG highlighted the significance of this acquisition, stating that it positions the company to provide more choices and better value in an industry currently dominated by large streaming platforms.
Upon closing, DirecTV will maintain its headquarters in El Segundo, California, and continue to be led by its current leadership team.
EchoStar is currently headquartered in Englewood, Colorado.