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TAKEAWAYS KEY
- DirecTV announced it had scrapped its acquisition by Dish Network after years of failed merger attempts between the satellite rivals.
- The bondholders of Dish, and its subsidiary DBS, had refused to accept the terms that parent EchoStar agreed on in order to seal the deal.
- DirecTV assumed debts worth billions to rival Dish.
DirecTV, the satellite rivals’ main competitor, announced on Thursday that it was scrapping its attempt to merge with Dish Network after years of failure.
DirecTV said that it has notified Dish owner EchoStar (SATS) it plans to cancel the deal at 11:59 p.m. Dish bondholders and DBS subsidiary DBS have resisted the deal.
According to The Wall Street Journal, bondholders representing around $10.7 billion of debt in Dish and DBS balked at a deal that "would have forced them to take a roughly $1.5 billion haircut on their holdings in exchange for more secure debt in the soon-to-be-merged satellite-TV company."
In September, EchoStar said that it would sell its video distribution operations, including Dish and streaming service Sling TV, to DirecTV for a nominal $1 as it moved to alleviate billions of dollars of debt. DirecTV will also assume approximately $9.75 billion of debt.
TPG's Deal To Buy Remaining 70% of DirecTV From AT&T Still on Track
“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,” Bill Morrow is the DirecTV CEO.
Morrow added that DirecTV is "well positioned for the future with a strong balance sheet and support from our long-term partner TPG."
DirecTV said the termination of the deal won’t affect TPG’s (TPG) acquisition of the private-equity firm’s remaining 70% stake in the satellite provider from telecommunications giant AT&T (T). That deal, where AT&T would sell its DirecTV stake for around $7.6 billion spread over the next few several years, still is expected to close in the second half of 2025.
EchoStar shares are up more than 2% in premarket trading, while those of AT&T are little changed.
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