As the pay-TV industry continues its downward spiral, DirecTV and Dish Network — two longtime rivals who have been exploring a partnership at different times for years — could be heading for the altar.
According to reports from Bloomberg, the Wall Street Journal and CNBC, DirecTV is in talks with EchoStar, Dish’s parent company, to acquire Dish and Sling TV. According to reports, a deal could be completed as soon as Monday, September 30.
Representatives for DirecTV and Dish did not respond to requests for comment.
The deal is driven by EchoStar CEO Charlie Ergen’s desire to pay off $1.98 billion in debt maturing in November 2024, CNBC reported. The company’s debt burden has raised the specter that EchoStar may seek bankruptcy reorganization if it fails to raise new capital or refinance its debt.
DirecTV launched in 1994 and Dish followed in 1996, and the two satellite TV companies provided stiff competition for the established cable TV operators. But over the past decade, both have seen their subscriber bases shrink by millions (much like traditional cable TV), with the rise of streaming leading to an exodus of consumers from the sector. DirecTV and Dish have launched Internet-delivered pay-TV packages, but these have not offset losses on the satellite side.
Together, DirecTV and Dish have nearly 20 million customers, which is about half their peak levels. According to Leichtman Research Group estimates, the DirecTV service had an estimated 11.3 million subscribers (including AT&T U-verse TV) at the end of 2023, up from 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 (6.07 million of which were for Dish TV and 2 million for Sling TV).
Previous rapprochements between DirecTV and Dish, dating back to 2001, have faced regulatory hurdles. But today, “It’s hard to imagine regulators would block a deal,” Craig Moffett, chief analyst at MoffettNathanson, wrote in a note to clients last week. ‘It’s better to have one [satellite TV operator] then none.”
AT&T, which bought DirecTV in 2014, spun off the satellite TV operator three years ago and retained a 70% stake, while private equity firm TPG Capital owned 30% of DirecTV.
Moffett noted that the synergies between DirecTV and Dish would “probably be much more limited than you would think.” For example, the two companies have no synergies in the satellite fleet because the two use different conditional access (video scrambling) technology. “It is difficult to argue that a merger should not happen; that clearly should happen,” Moffett wrote. “Consolidation during a period of prolonged downturn 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 will not change the story for programmers, distributors or even for satellite TV.”