Direct Satellite Service Provider DirectTV Agrees to Acquire Dish Network and Streaming Service Sling TV for a Symbolic Dollar and a Mounting Debt Amount
After years of considering a tie-up, the two largest satellite TV giants in the nation have finally inked a deal to unite forces as the broadcasting industry faces challenges from tech companies and network-owned streaming services. DirectTV announced on Monday that it will purchase Dish and Sling TV from EchoStar for a measly dollar, taking on their $9.75 billion debt in the process.
This union of the satellite TV providers attempts to navigate a market controlled by tech titans and network-owned streaming services. In 2002, EchoStar attempted to buy DirecTV from its then-owner Hughes Electronics Corporation. However, the Federal Communications Commission thwarted the deal by blocking it, and the Department of Justice filed a lawsuit to halt it, asserting that the merger would create a TV monopoly in certain regions where cable was scarce.
announced Monday that it will acquire Dish and Sling TV from EchoStar for $1 while assuming the companies’ $9.75 billion in debts.
At the time, EchoStar had approximately 7.5 million subscribers, while DirecTV had 10.9 million. By 2016, DirecTV's customer base had more than doubled to 25.5 million. But with the acceleration of streaming services and other competitors, like Elon Musk's Starlink, entering the picture, the satellite TV industry has suffered.
sued to prevent it, arguing that the merger would create a TV monopoly in parts of the country where cable television wasn’t available.
Today, the two companies have roughly the same number of subscribers as they did in 1998 when the merger was stopped, with EchoStar reporting about 8 million subscribers in June and analysts estimating DirecTV's subscriber base to be around 11 million. The competition in the pay-TV sector is so fierce that a merger is now more about survival than creating a monopoly.
reporting about 8 million subscribers as of June and analysts
Bill Morrow, CEO of DirecTV, exclaimed in a statement announcing the merger, "DirecTV operates in a highly competitive video distribution industry. With larger scale, we expect a combined DirecTV and Dish will be better equipped to work with programmers, realizing our vision for TV, which is to aggregate, curate, and distribute content tailored to customers’ interests. This will also position us better to achieve operating efficiencies while creating value for customers through additional investment."
estimating DirecTV’s subscriber base to be around 11 million–but the rise of other competitors means that a merger is now more about survival than creating a monopoly.
As part of the deal, AT&T, holding a 70% stake in DirecTV, will sell its shares to TPG, a private equity firm that owns the remaining 30%, for $7.6 billion.
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The merger is subject to federal regulatory approval, as under President Biden, regulatory agencies have been increasingly active on antitrust cases. However, both companies claim that the merger will increase competition for television and wireless network customers, providing U.S. consumers with more options and driving innovation at a faster pace. Hamid Akhavan, CEO of EchoStar, explained, "This will provide U.S. wireless consumers with more choices and help to drive innovation at a faster pace. We expect DISH and EchoStar bondholders to benefit from two companies with stronger financial profiles and more sustainable capital structures."
antitrust
Source:[1] Directv.com[2] Variety.com[3] Adweek.com
cases.
- The tech industry's influence and network-owned streaming services have pushed the broadcasting industry to its limits, prompting the merge between DirectTV and Dish, two satellite TV giants.
- The proposed merger between DirectTV and EchoStar's Dish and Sling TV is anticipated to potentially face antitrust cases due to the increasing regulatory activity in this area under President Biden.
- Fitch Ratings is estimating that DirectTV's subscriber base could be around 11 million following the merger, reflecting the current fierce competition in the pay-TV sector.
- As part of the merger, EchoStar's satellite technology could benefit from DirectTV's strong partnerships with tech companies, enabling it to improve its offerings and better compete in the changing media landscape.