DirecTV’s $9.75 Billion Dish Acquisition Hinges on Bondholder Agreement

DirecTV has announced it will abandon its acquisition of EchoStar’s satellite television business, which includes Dish TV, if an agreement on debt restructuring with Dish bondholders is not reached by November 22. The announcement on Tuesday comes after Dish bondholders on Monday declined DirecTV’s offer of a debt exchange deal, which would involve bondholders taking a $1.5 billion reduction on their holdings, according to CNN.

This debt-exchange arrangement was a key element of the proposed acquisition. “A successful exchange was a condition for acquiring the Dish video business,” a DirecTV spokesperson told Reuters via email. With the bondholders’ refusal, DirecTV “will have no choice but to terminate the acquisition of Dish by midnight on Nov. 22,” the spokesperson stated.

The acquisition deal, which was initially disclosed in September, aimed to bring together two major players in the pay-TV industry at a time when satellite television providers face increasing challenges from streaming platforms. The proposed terms would allow DirecTV to purchase Dish’s pay-TV division, known as Dish DBS, for a nominal $1 while taking on approximately $9.75 billion of Dish’s debt. As part of this agreement, Dish and DirecTV had introduced a debt exchange offer, giving bondholders the chance to extend their bond maturities in exchange for a reduced payout.

Read more: DirecTV Acquires Dish TV, Creating 20 Million-Subscriber Powerhouse

This move would have offered EchoStar, the parent company of Dish, a financial reprieve. The company, co-founded by telecommunications entrepreneur Charlie Ergen, is currently carrying more than $20 billion in debt. According to CNN, the potential merger was seen as a means to stabilize both satellite TV giants amidst rapid declines in traditional pay-TV subscriptions. EchoStar and Dish, however, did not immediately respond to requests for comment from Reuters regarding the latest developments.

Source: CNN