EchoStar Shares Fall With Dish-DirecTV Merger Prospects Dim

(Bloomberg) — DirecTV notified EchoStar Corp. of its intention to terminate an acquisition of Dish Network Corp. after bondholders failed to consent to a key debt exchange, all but killing a deal to create the largest US pay-TV service.

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DirecTV, which warned earlier this month it would terminate the deal by 11:59 p.m. Friday without an agreement on the debt, said it has given EchoStar formal notice. Dish hadn’t initiated fresh discussions with bondholders to try and salvage the deal as of late Thursday evening, a person familiar with the matter said.

EchoStar shares were down more than 3% on Friday as of noon in New York.

Under an agreement reached in late September, DirecTV was to acquire Dish and Sling TV from EchoStar for $1 plus the assumption of about $9.75 billion of debt. DirecTV, which is owned by AT&T Inc. and joint venture partner TPG Inc., would have become the largest pay-TV provider in the US with about 18 million subscribers.

“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,” DirecTV Chief Executive Officer Bill Morrow said in a statement.

EchoStar confirmed in a filing on Friday that it had received written notice from DirecTV on Nov. 20. It added no termination fee or other payment is due from either party as a result.

A group of Dish bondholders rejected an improved offer put forward by DirecTV at the end of October. Revised terms lowered the minimum loss on $8.9 billion of bonds by $70 million to $1.5 billion.

The action doesn’t impact TPG’s planned acquisition of AT&T’s stake in DirecTV, which is expected to close in the second half of 2025, the company said.

The collapse of the deal is a setback for EchoStar’s effort to focus on its mobile network and satellite connectivity businesses, which have more growth potential. The sale would have removed a drag on the wider EchoStar from Dish’s decline and the roughly $11 billion of debt within the unit.

“It’s disgraceful, but not a surprise,” said Jonathan Chaplin, managing partner at New Street Research. “There’s somewhere between $4-to-8 billion in value that evaporates because the deal doesn’t happen.”

Without the transaction, the satellite-TV business will continue to be a financial strain on EchoStar as it tries to grow the wireless business against giants like AT&T, T-Mobile US Inc. and Verizon Communications Inc. EchoStar will face around $6.2 billion of debt due in 2026 across its Dish DBS and Hughes subsidiaries, which S&P Global Ratings has said would require it to raise additional capital.

Meanwhile, owners of debt floated by EchoStar’s Dish subsidiary would likely continue their court battle over an earlier transfer of valuable assets, including some spectrum licenses, out of their reach. A committee of creditors said in a recent letter that it is confident in the merits of the lawsuit it filed in April and amended again on Thursday.

“It makes everyone’s life a little bit more difficult if it doesn’t go through,” said Davis Hebert, senior analyst at CreditSights.

–With assistance from Irene García Pérez.

(Updates with share trading, analysts comments throughout.)