DirecTV, a U.S. satellite TV provider, has ended its agreement to acquire Echostar’s satellite television business, which includes its rival, Dish TV. The merger was set to create one of the largest pay-TV providers in the U.S., with a combined subscriber base of 20 million. For the deal to succeed, Dish’s bondholders needed to agree to swap their existing debt for new debt in the merged company at a reduced value, essentially accepting a loss of around $1.57 billion.
DirecTV had planned to purchase Dish DBS, which includes Dish TV and Sling TV, for $1, while also assuming about $9.75 billion of Dish’s debt. However, the deal was called off because DirecTV felt the proposed debt exchange terms were necessary to protect its financial health and operational flexibility, according to CEO Bill Morrow. The termination of the deal will take effect on Friday.
EchoStar, the parent company of Dish, did not immediately comment on the cancellation. The merger, first announced in September, was seen as a strategic move in the declining pay-TV market and was intended to provide financial relief to EchoStar, which, co-founded by Charlie Ergen, is struggling with over $20 billion in debt. DirecTV and Dish have had intermittent discussions about a merger over the years.