DirecTV announced Monday it is buying rival Dish Network, ending multiple decades of on-and-off again talks about the satellite services merging.
The companies have struggled to retain subscribers in the streaming era. As platforms like Netflix, Hulu, Amazon Prime and YouTube have gained traction, peeling millions of subscribers away from pay TV with lower price tags and on-demand content, DirecTV and Dish have found it increasingly difficult to justify rising subscription costs, worsening already dramatic cord-cutting.
Under the deal, DirecTV will pay Dish's owner, EchoStar, just $1 for Dish in exchange for assuming its billions of dollars in debt.
Private equity firm TPG, meanwhile, will acquire AT&T's remaining 70% stake in DirecTV. The move comes nine years after AT&T purchased the company in 2015 only to sell a 30% stake to TPG in 2021.
The deal still hinges on Dish bondholders agreeing on net debt lower than $1.56 billion. Bondholders can accept a lower percentage, take a slightly higher percentage today, or wait it out, which risks Dish ending up in bankruptcy.
Dish currently has a $2 billion debt maturity coming up on November 23. To secure funding through a shared revenue stream, TPG and DirecTV will provide Dish with a $10 billion loan that will allow the company to pay off its maturity on November 24.
The newly merged DirecTV-Dish entity will continue to support the Dish brand for the foreseeable future, the DirecTV spokesperson said. DirecTV does not currently have plans to make changes to the existing Dish or Sling TV brands, meaning that current Dish customers should not be concerned about being forced over to DirecTV.
If they combine, the new service would have about 20 million subscribers with DirecTV accounting for over 11 million of that number. Yet this figure pales compared to DirecTV's 20.3 million peak TV subscriber base in 2015 when AT&T bought a majority stake in the company.
