Hamid Akhavan, CEO of EchoStar, speaking on CNBC’s “Squawk on the Street” on September 30, 2024.
CNBC
EchoStar is selling provider Dish TV and digital business Sling to rival DirecTV in a deal announced Monday that brings together two of the biggest pay-TV providers. Shares of EchoStar fell more than 11% on Monday.
DirecTV agreed to pay a nominal fee of $1 for Dish. The deal will see DirecTV take on about $9.75 billion in debt and is contingent on the consent of certain of Dish’s bondholders, according to a press release.
The deal is expected to close in the fourth quarter of 2025. Combined, DirecTV and Dish will serve nearly 20 million customers, according to Reuters.
“This was the right time to bring the companies together so we could create a company that would ultimately have the ability to negotiate better deals with developers and bring to market smaller packages, bite-sized packages, that consumers are asking for. EchoStar CEO Hamid Akhavan told CNBC’s “Squawk on the Street” on Monday.
“I think this has been a scale play that puts us on a level playing field with market competitors,” he said.
The content distribution industry as a whole has seen a big decline, Akhavan said, and distribution companies like Dish and DirecTV have fallen behind other platforms with newer technologies and wider reach.
He also said that EchoStar was unable to fully support both its video distribution and core wireless Internet businesses, and that this merger would allow the company to devote all of its resources to its core services.
Also on Monday, AT&T announced that it will sell its entire 70% stake in DirecTV to a private equity firm TPG for $7.9 billion. The company sold 30% of its stake to TPG in 2021, which was then valued at $16.2 billion. AT&T originally bought DirecTV in 2014 for $48.5 billion.
The possibility of a merger between Dish and DirecTV has been rumored for decades. The companies it was close in a 2002 deal in which EchoStar would have acquired DirecTV General MotorsHughes Electronics, before the Federal Communications Commission shut it down. At the time, EchoStar beat out Rupert Murdoch’s News Corporation in a bidding war for DirecTV.
Since then, the satellite TV industry has taken several major hits as consumers have moved to streaming services. With a debt payment of about $2 billion looming and just $521 million in cash and cash equivalents as of June 30, according to public filings, EchoStar increasingly faced the prospect of bankruptcy. The company recently tried to refinance some debt but failed to reach an agreement with bondholders, according to September 23 deposition.
Akhavan said EchoStar has secured enough capital for a bright future, but won’t be making many big moves anytime soon as it’s still digesting the recent changes. He said the company will prioritize customer acquisition over service expansion.
“We’re as competitive as anyone in terms of our offerings, whether it’s price, whether it’s coverage, whether it’s quality,” he said.
— CNBC’s Lillian Rizzo and Alex Sherman and Reuters contributed to this report.
