DirecTV agreed Monday to purchase EchoStar’s satellite television business.
The combined company will create one of the largest pay-TV distributors in the United States with some 20 million subscribers.
DirecTV will acquire EchoStar’s video distribution business, including DISH TV and Sling TV, in exchange for a nominal of $1 but will also take on DISH DBS net debt.
While talks between the two companies have been constant over the last two decades, the growing pressure from so-called cord cutting and the high-profile streaming services have taken the two over the line.
Combined, DirecTV and DISH have collectively lost 63% of their satellite customers since 2016.
“DirecTV operates in a highly competitive video distribution industry,” said Bill Morrow, Chief Executive Officer, DirecTV. “With greater scale, we expect a combined DIRECTV and DISH will be better able to work with programmers to realise our vision for the future of TV, which is to aggregate, curate, and distribute content tailored to customers’ interests, and to be better positioned to realise operating efficiencies while creating value for customers through additional investment.”
“This agreement is in the best interests of EchoStar’s customers, shareholders, bondholders, employees, and partners,” said Hamid Akhavan, President and Chief Executive Officer, EchoStar. “With an improved financial profile, we will be better positioned to continue enhancing and deploying our nationwide 5G Open RAN wireless network. This will provide US wireless consumers with more choices and help to drive innovation at a faster pace.”
In a join statement the companies said the increased scale would incentivise programmers to allow smaller packages at lower price points. The viability of the satellite platform would also be improved by the sharing of fixed infrastructure and operating expenses – though we don’t know over what time scale the combined company would drop one of its orbital slots.
Already the business is about more than just delivering TV over satellite. EchoStar’s DISH streaming business is also part of the transaction and freed of some of its financial constraints Echostar will now develop its nationwide facilities-based wireless service to compete with dominant incumbent wireless carriers.
