Charlie Ergen, chairman and co-founder of Dish Network.
Jonathan Alcorn | Bloomberg | Getty Images
Charlie Ergen is selling the pay-TV business he founded more than 40 years ago.
echo star is in advanced talks to sell satellite TV provider Dish Network to rival DirecTV, the closely held pay-TV operator owned by private equity firm TPG. American Telephone and Telegraph Company, According to people familiar with the matter. While the two sides hope to reach a deal by Monday, a deal is not guaranteed and talks could still fall apart, people familiar with the matter said.
Rumors of a merger between Dish and DirecTV had been circulating for years and almost became a reality in 2002, until Failed under regulatory pressure. The deal was driven by EchoStar’s desire to repay $1.98 billion in debt due in November, two people familiar with the matter said. EchoStar had just $521 million in cash and cash equivalents and marketable investment securities as of June 30, according to public filings, and expects to have negative cash flow for the remainder of 2024.
The prospect of a future EchoStar bankruptcy and creditor approval of the deal complicates the completion of the deal. Earlier this week, Dish attempted to refinance some of its debt with bondholders, but talks failed. Filing on September 23.
The company said in public filings that it was still in discussions with other debt holders.
The potential DirecTV-Dish deal would be structured as an all-cash deal, with DirecTV paying EchoStar for its satellite TV business, digital business Sling and related liabilities, people familiar with the matter said.. A person familiar with the matter said the total value of the deal could exceed $9 billion.
A DirecTV spokesman declined to comment. A Dish spokesman could not immediately be reached for comment.
“The bottom line is that we now view (EchoStar’s) bankruptcy within the next four to six months as the most likely outcome,” MoffettNathanson’s Craig Moffett said in a note to clients last month. “They will need to raise new capital. funds.”
EchoStar has a total enterprise value of approximately US$31 billion and a market capitalization of approximately US$7.6 billion. The proposed deal does not involve wireless spectrum, which Dish Network has been accumulating over the past decade as it seeks to transform itself into a wireless company, people familiar with the matter said.
Satellite TV was once one of the largest TV bundle distributors, Has been declining for years — often faster than cable rivals – As consumers turn to subscription streaming services, e.g. Netflix, Disney+ and Amazon High quality video. At the end of last quarter, Dish had 6.1 million satellite customers and 2 million Sling TV (Dish’s linear Internet package) customers.
DirecTV is feeling the pain, too, having lost millions of subscribers since AT&T acquired the company in 2015 with $67 billion in debt. AT&T spun it off in 2021 and sold part of the company to TPG. At the time, DirecTV had approximately 15.4 million subscribers. According to previous reports by CNBC, the number of users is currently about 11 million.
The company has been working on growing its streaming business lately, and its latest advertising campaign revolves around dispelling the notion that DirecTV can only be viewed through a satellite dish. MoffettNathanson estimates DirecTV added more than 20,000 streaming customers earlier this year. Most of its customers still use satellite dishes.
DirecTV recently engaged in a distribution war with Disney that resulted in networks including ESPN being shut down to the satellite TV company’s customers for nearly two weeks. The two companies have struck a deal that will allow DirecTV to offer more streamlined, genre-specific packages.
—CNBC’s Lillian Rizzo contributed to this report.
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