DirecTV terminates acquisition of Dish from Echostar (SATS.US) after debt exchange failure
1min read Zhitong Finance learned that DirecTV, a satellite television provider in the United States, said on Thursday that it had terminated its agreement to acquire EchoStar's (SAT.US) satellite television business, which includes its rival Dish TV, due to the failure of a debt exchange proposal. DirecTV said the termination would take effect on Friday. The company's chief executive said: "We have terminated the transaction because the proposed exchange terms were necessary to protect the balance sheet of DirecTV and our operating flexibility."
The deal would have created one of the largest pay-TV distributors in the United States, with 20 million subscribers. To make the deal work, Dish's bondholders had to agree to exchange their debt for new debt in the combined entity at a discount, or "write down" about $1.57 billion of debt. As part of the deal, DirecTV would pay $1 for Dish's pay-TV business, known as Dish DBS, including Dish and Sling TV, and take on about $9.75 billion of Dish's debt. A group representing about 85 per cent of Dish's bondholders reportedly rejected the proposal last week.
The proposed deal, which was announced last September, was seen as a strategic consolidation in a shrinking pay-TV market. It would also have provided a vital lifeline for EchoStar, which was founded by telecommunications entrepreneur Charlie Ergen and is currently saddled with more than $20bn of debt. DirecTV and Dish have been in on-again, off-again negotiations for years.