(Credit: DirecTV)
The two major satellite TV providers in the US, DirecTV and Dish Network, are merging to try and better compete in today’s video-streaming era.
The deal promises to provide a satellite TV service with "more flexibility and better value," says DirecTV, which is buying Dish’s video distribution business from parent company EchoStar.
“With greater scale, we expect a combined DirecTV and Dish will be better able to work with programmers to realize our vision for the future of TV, which is to aggregate, curate, and distribute content tailored to customers’ interests,” says DirecTV CEO Bill Morrow.
As part of the deal, AT&T is selling its 70% stake in DirecTV to TPG, the private equity firm that holds the remaining shares in the satellite TV provider. In return, AT&T expects to receive $7.6 billion and exit the satellite TV business.
(Credit: Patrick T. Fallon/Bloomberg via Getty Images)The news comes as the satellite TV platforms have lost millions of subscribers. Many US consumers, particularly the younger generation, have cut the cord and watch video streaming services, whether through subscriptions or for free.
DirecTV is now indicating it needs to acquire Dish’s TV business to form a major satellite TV company with enough power to negotiate better deals with TV content providers. Specifically, DirecTV wants “to deliver smaller packages at lower price points” when the company’s cheapest plan can cost $69.99 per month with a two-year contract.
In addition, DirecTV will take over Dish’s Sling TV. The live TV video streaming service has already been competing with Hulu’s live TV service and Google’s YouTube TV. DirecTV says it will also invest in its own streaming services.
EchoStar, meanwhile, will retain control of Dish’s 5G cellular business through the Boost Mobile brand. Selling off Dish’s TV business promises to free up resources so it can invest in becoming a major player in the cellular market.
“With an improved financial profile, we will be better positioned to continue enhancing and deploying our nationwide 5G Open RAN wireless network,” says EchoStar CEO Hamid Akhavan. “This will provide US wireless consumers with more choices and help to drive innovation at a faster pace.”
Under the deal, DirectTV will buy Dish TV and Sling TV from EchoStar for only $1 in exchange for taking on $9.8 billion in debt. But the acquisition must be approved by regulators, who will no doubt scrutinize the merger on antitrust grounds. As a result, DirecTV doesn’t expect the deal to close until Q4 2025.