DirecTV announced on Monday that it has acquired EchoStar’s satellite television business. This deal, which was agreed upon for a nominal fee of $1, will create one of the largest pay-TV distributors in the United States with a combined subscriber base of around 20 million. As part of the agreement, DirecTV will also assume EchoStar’s DISH DBS net debt.
The decision to merge comes after years of talks between the two companies, driven by increasing pressure from cord cutting and the rise of popular streaming services. Since 2016, both DirecTV and DISH have seen a combined decline of 63% in their satellite customers.
“DirecTV operates in a highly competitive video distribution industry,” said Bill Morrow, Chief Executive Officer, DirecTV. “With greater scale, we expect a combined DIRECTV and DISH will be better able to work with programmers to realise our vision for the future of TV, which is to aggregate, curate, and distribute content tailored to customers’ interests, and to be better positioned to realise operating efficiencies while creating value for customers through additional investment.”
Hamid Akhavan, President and Chief Executive Officer, EchoStar, echoed these sentiments, stating, “This agreement is in the best interests of EchoStar’s customers, shareholders, bondholders, employees, and partners. With an improved financial profile, we will be better positioned to continue enhancing and deploying our nationwide 5G Open RAN wireless network. This will provide US wireless consumers with more choices and help to drive innovation at a faster pace.”
In a joint statement, the companies outlined their plans to leverage their combined scale. They stated that this will allow them to incentivize programmers to offer smaller packages at lower price points. The sharing of fixed infrastructure and operating expenses will also improve the viability of the satellite platform. While the timeframe for merging the orbital slots remains unclear, the combined company is expected to ultimately operate from a single slot.
The transaction also includes EchoStar’s DISH streaming business, which is expected to benefit from the reduced financial constraints. EchoStar plans to use this newfound flexibility to develop its nationwide facilities-based wireless service, aiming to compete directly with dominant incumbent wireless carriers.