DirectTV Will Buy Dish and Sling TV for $1 and a Bunch of Debt

After decades of flirting with a merger, the nation’s two largest satellite TV providers have reached a deal to join forces in an effort to survive in a broadcasting industry dominated by tech firms and network-owned streaming services.

DirecTV announced Monday that it will acquire Dish and Sling TV from EchoStar for $1 while assuming the companies’ $9.75 billion in debts.

The satellite companies, under different corporate umbrellas, first tried to merge in 2002 when EchoStar attempted to buy DirecTV from its then-owner Hughes Electronics Corporation. But the deal fell apart after the Federal Communications Commission voted to block the deal and the Department of Justice sued to prevent it, arguing that the merger would create a TV monopoly in parts of the country where cable television wasn’t available.

At the time, EchoStar had approximately 7.5 million subscribers and DirecTV had 10.9 million subscribers. By 2016, DirecTV had more than doubled its customer base to 25.5 million subscribers. But as streaming services began to dominate the TV landscape and other satellite companies, like Elon Musk’s Starlink, entered the picture, the satellite TV business slumped.

Today, the two companies boast roughly the same number of customers as they did when federal regulators nixed their merger more than two decades ago–with EchoStar reporting about 8 million subscribers as of June and analysts estimating DirecTV’s subscriber base to be around 11 million–but the rise of other competitors means that a merger is now more about survival than creating a monopoly.

“DirecTV operates in a highly competitive video distribution industry,” Bill Morrow, the company’s CEO, said in a statement announcing the deal. “With greater scale, we expect a combined DirecTV and Dish will be better able to work with programmers to realize 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 realize operating efficiencies while creating value for customers through additional investment.”

As part of the deal, AT&T, which owns a 70 percent stake in DirecTV has agreed to sell its shares to TPG, a private equity firm that owns the remaining 30 percent of the company, for $7.6 billion.

The deal must still be approved by federal regulators, who under President Joe Biden have been particularly active on antitrust cases.

The statements from company executives announcing the deal emphasized that the merger would increase, rather than hurt competition for both television and wireless network customers.

“This will provide U.S. wireless consumers with more choices and help to drive innovation at a faster pace,” Hamid Akhavan, CEO of EchoStar, said in a statement. “We expect DISH and EchoStar bondholders to benefit from two companies with stronger financial profiles and more sustainable capital structures.”