While sometimes mergers and acquisitions signal the strength of a market, this cannot be said of the merger of former Direct-to-Home (DTH) satellite TV rivals Dish Network and DirectTV. In a double move, Dish Network was acquired by DirecTV from its owner Echostar for just one dollar, plus acquiring its US$10 million debt. Meanwhile, DirecTV’s majority shareholder AT&T sold its 70 per cent holding to private equity firm TPG Partners for US$7.6 million. The deal will leave the combined Dish-DirecTV firm with 18 million paying subscribers.
Courtesy: DirecTV
In effect the pair of satellite TV operators have realised that, rather than being enemies, it is better to join forces to fight outsiders – mainly online streaming services – to hold onto subscribers. AT&T is leaving the entertainment business altogether. The deal, which is yet to be finalised, hinges on the Dish debt being reduced to less than US$1.56 billion through an agreement with bondholders to accept a ‘haircut’, meaning they lose money.
