A $9.8 billion deal to create the largest U.S. pay-TV distributor is now dead, with a heavy debt load both undoing this pact and spotlighting the broader challenges across the media business.
Less than two months after DirecTV reached an agreement to acquire satellite-TV rival Dish Network, the pact that would have created an entity with nearly 20 million subscribers is no longer happening after Dish Network’s bondholders objected to the terms. DirecTV was to gain Dish Network for just $1 and assumed debt of nearly $10 billion, but that also would have required the existing bondholders to take a nearly $1.6 billion discount on that debt—something they refused to do.
“While we believed a combination of DirecTV and Dish would have benefitted all stakeholders, we have terminated the transaction because the proposed exchange terms were necessary to protect DirecTV’s balance sheet and our operational flexibility,” said DirecTV CEO Bill Morrow.
A separate deal in which private equity giant TPG Inc. will acquire from AT&T the 70% stake in DirecTV it doesn’t already own remains on track, but it is now happening without the opportunity for greater scale in the marketplace.
The moves are also happening as the U.S. traditional pay-TV business has shrunk by nearly half over the last decade, now standing at about 54 million U.S. households and continuing to decline. DirecTV, however, still has numerous sports ties, including commercial distribution rights to NFL Sunday Ticket, and acting this past summer as the primary sponsor of a series of friendlies in the U.S. involving top European pro clubs.
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