DirecTV and Dish Network, longtime satellite TV adversaries, are set to merge. DirecTV announced a deal with Dish parent company EchoStar to acquire Dish in a deal valued at nearly $10 billion.
Under the terms of the purchase agreement, DirecTV will acquire EchoStar’s video distribution business, including Dish TV and Sling TV, in exchange for a “nominal consideration” of $1 (yes, one dollar) — plus the assumption of the Dish unit’s net debt with a total face value of approximately $9.75 billion.
In addition, AT&T said it will sell its 70% stake in DirecTV to TPG, the venture capital firm that owns 30% of the operator.
The deal requires U.S. regulatory approvals, including antitrust clearance. Analysts have said they expect a DirecTV-Dish combination to win approval by regulators, given the dramatic decline in the traditional pay-TV biz as consumers have cut the cord and flocked to streaming services.
Together, DirecTV and Dish would have nearly 20 million customers, which is down roughly half from their peak levels. DirecTV service had an estimated 11.3 million subscribers (inclusive of AT&T U-verse TV) as of the end of 2023, according to estimates from Leichtman Research Group, compared with a peak of 25.5 million at the end of 2016. Dish, which once had more than 14 million customers, ended the second quarter of 2024 with 8.07 million pay-TV subscribers (including 6.07 million for Dish TV and 2 million for Sling TV).
DirecTV launched in 1994 and Dish followed in 1996, and the two satellite TV companies provided robust competition to incumbent cable TV operators. But in the past decade, both have seen their subscribers rolls shrink by the millions (as has traditional cable TV) with the rise of streaming prompting a consumer exodus from the sector. DirecTV and Dish have launched internet-delivered pay-TV packages, but those have not offset losses on the satellite side.
Past overtures between DirecTV and Dish, dating back to 2001, have faced regulatory hurdles. But today, “It’s hard to imagine that regulators would block a deal,” MoffettNathanson principal analyst Craig Moffett wrote in a Sept. 16 note to clients. “Better to have one [satellite TV operator] than none.”
DirecTV said it estimates that the combination with Dish has the potential to generate cost savings of at least $1 billion annually. According to Moffett, operational synergies between DirecTV and Dish would “likely be much more limited than you might imagine” and he said a merger of the two would have limited impact on the industry’s overall trajectory. For example, the two companies have no synergies in the satellite fleet because they use different conditional access (video scrambling) technology.
“It’s hard to argue that a merger shouldn’t happen; it clearly should,” Moffett wrote in the Sept. 16 note. “Consolidation during a period of secular decline is always to be expected. But it would be a mistake to overestimate its importance. Adding a year or so to the expected life of satellite TV isn’t going to change the narrative for programmers, distributors, or even for satellite TV.”
AT&T, which bought DirecTV in 2014, three years ago spun off the satellite TV operator, retaining a 70% stake and private-equity firm TPG Capital holding the remaining 30%.
Two years ago, DirecTV suffered a blow when it lost its exclusive deal with the NFL for the Sunday Ticket premium games package, which it had offered since 1994. Google inked a seven-year deal with the NFL to sell the package via YouTube, starting with the 2023-24 season; currently, Sunday Ticket includes all out-of-market Sunday regular-season NFL games that are broadcast on Fox and CBS.
