DirecTV has decided to back out of its plan to buy Dish Network’s satellite TV service and Sling TV streaming platform. DirecTV said the main reason for ending the agreement was Dish’s failure to fix its outstanding debt issues.
This deal was announced in September and aimed to merge the two satellite TV companies. As part of the deal, DirecTV was supposed to take on about $10 billion in Dish’s debt, but this was only possible if Dish could negotiate a deal with its creditors, which did not happen. Creditors turned down Dish’s proposed terms, which left the satellite company with a lot of debt and unable to move forward with the merger.
DirecTV’s CEO, Bill Morrow, explained that while merging seemed good for everyone at first, they had to cancel it to protect DirecTV’s finances and ability to operate. Morrow said, “while we believed a combination of DirecTV and DISH would have benefitted all stakeholders, we have terminated the transaction because the proposed Exchange Terms were necessary to protect DirecTV’s balance sheet and our operational flexibility.”
The ending of the Dish acquisition will not likely change who owns DirecTV. AT&T had already sold a 30 percent share of DirecTV to the private equity firm TPG, while keeping 70 percent for itself. This 70 percent is still intended to be sold to TPG, and the failure of the Dish deal won’t change that.
The failure of the merger puts Dish Network in a tough spot financially. The proposed merger was a way for Echostar, the current owner, to drop its television assets and liabilities and focus on building its 5G network, which is taking longer than expected. Since the deal is off, Echostar needs to figure out a new strategy for Dish.
Dish is dealing with a huge debt of $10 billion, and this mix of high debt and fewer subscribers creates a big challenge for the company. Dish will probably have to look for different ways to manage its debt and improve its situation in the market.
Source: TV Answer Man, CNN
