DirecTV has terminated its deal with EchoStar to acquire Dish DBS after bondholders opposed a debt swap proposal. The merger would have created the largest pay-TV provider in the United States, with DirecTV assuming EchoStar's debt.
“Although we believed that combining DirecTV and DISH would have benefited all stakeholders, we terminated the transaction because the terms of the proposed exchange were necessary to protect DirecTV's balance sheet and our operational flexibility,” DirecTV CEO Bill Morrow said in a statement. “DirecTV will advance our mission of aggregating, organizing and distributing content tailored to customers' interests by pursuing innovative products and providing customers with more choice, flexibility and control. We are well positioned for the future with a strong balance sheet and support from our long-term partner TPG.”
EchoStar's stock previously fell 13% last week after news that Dish Network's bondholders rejected a proposed debt deal seen as key to completing a merger with satellite rival DirecTV.
Shares fell to $22.76, their lowest level since early September, or three times their normal trading volume. On September 30, Dish and DirecTV announced their intention to merge and create the largest pay-TV provider in the United States. While previous attempts to merge have been thwarted by regulators on anti-competitive grounds, the ravages of cord-cutting have made both players smaller and less dominant, making approval this time more likely.
Dish and EchoStar merged in January, and the combined company pursued a communications-oriented strategy, moving away from pay TV in an attempt to challenge established players AT&T, Verizon and T-Mobile. With a large debt load and looming repayments, EchoStar is trying to negotiate with lenders in order to avoid possible bankruptcy.
