Charlie Ergen, the founder of EchoStar and Dish Network more than 40 years ago, is nearing the sale of his pay-TV business. According to sources familiar with the matter, EchoStar is currently in advanced talks to sell satellite TV provider Dish Network to rival DirecTV, a pay-TV operator owned by private equity firm TPG and AT&T. While both sides hope to finalize the deal by Monday, there is no guarantee that the agreement will proceed, and discussions may still fall apart.
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The combination of Dish and DirecTV has been rumored for years and nearly materialized in 2002 before collapsing under regulatory pressure. This time, the push for the deal comes from EchoStar’s need to pay off $1.98 billion in debt that matures in November. According to public filings, EchoStar had just $521 million in cash and cash equivalents as of June 30 and is forecasting negative cash flows for the remainder of 2024.
The prospect of a potential EchoStar bankruptcy and the need for creditor approval complicate the completion of the deal. Dish attempted to refinance some of its debt with bondholders earlier this week, but negotiations failed, according to a filing on September 23.
The company stated in public filings that it remains in discussions with other debtholders.
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A potential transaction between DirecTV and Dish is being structured as an all-cash deal, with DirecTV paying EchoStar for the satellite TV business, its digital business Sling, and associated liabilities. Overall, the transaction may be worth more than $9 billion, according to one source.
A spokesperson for DirecTV declined to comment, while a spokesperson for Dish could not be reached for immediate comment.
Craig Moffett of MoffettNathanson noted in an August report that, “The bottom line is that we now see bankruptcy in the next four to six months as the most likely outcome for EchoStar. They will need to raise new capital.”
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EchoStar has a total enterprise value of about $31 billion and a market capitalization of about $7.6 billion. There is no wireless spectrum involved in the proposed deal, which Dish Network has spent the past decade accumulating in its quest to transition into a wireless company.
Satellite TV, once one of the biggest distributors of the TV bundle, has been declining for years—often at a faster rate than cable competitors—as consumers switch to subscription streaming services like Netflix, Disney+, and Amazon Prime Video. Dish ended its last quarter with 6.1 million satellite subscribers and 2 million customers for Sling TV, Dish’s over-the-internet package of linear networks.
DirecTV has also felt the pain, losing millions of subscribers since AT&T acquired the company in 2015 for $67 billion in debt. AT&T spun it out in 2021 and sold a portion of the company to TPG. At that time, DirecTV had approximately 15.4 million subscribers. It has about 11 million today.
The company has recently focused on building out its streaming business, centering its latest ad campaign around dispelling the belief that DirecTV is only available through a satellite dish. MoffettNathanson estimates DirecTV added more than 20,000 streaming customers earlier this year, although the bulk of its customers still use satellite dishes.
Most recently, DirecTV was embroiled in a distribution dispute with Disney, which saw networks including ESPN go dark for nearly two weeks for the satellite TV company’s customers. The two companies reached a deal that gives DirecTV the ability to offer slimmer, genre-specific bundles.
