DirecTV agrees to buy satellite rival Dish (and its debt) for one dollar

Dish out —

DirecTV to take on Dish's $10B debt and TPG will buy AT&T's 70% stake in DirecTV.

DirecTV today announced an agreement to buy the Dish satellite TV and Sling TV streaming business from EchoStar for a nominal fee of $1 in what the companies called a debt exchange transaction. DirecTV will take on $9.75 billion of Dish debt if the deal is completed.

In a related transaction also announced today, private equity firm TPG plans to buy AT&T's 70 percent stake in DirecTV. TPG already owns the other 30 percent of DirecTV.

The pending DirecTV/Dish deal would combine the two major satellite TV companies in the US, removing a choice for satellite users. But DirecTV claims it "will benefit US video consumers by creating a more robust competitive force in a video industry dominated by streaming services owned by large tech companies and programmers." The agreement, which follows years of on-again, off-again merger discussions between the companies, needs regulatory approval and is tentatively planned to close in Q4 2025.

EchoStar will continue to own Dish Network, which is building a 5G wireless network to offer cellular services. EchoStar, which also owns satellite Internet provider Hughes, said that selling its Dish TV business will refocus its portfolio on the "growing wireless and satellite connectivity markets."

EchoStar also said today that it is raising $5.1 billion from existing investors to help fund the 5G rollout and "other general corporate purposes." Dish's 5G plans were previously boosted by the 2020 T-Mobile/Sprint merger in which regulatory authorities required T-Mobile and Sprint to sell assets to Dish.

"Today's announcements accelerate EchoStar's mission of deploying a nationwide facilities-based wireless service to compete with dominant incumbent wireless carriers and its ability to further leverage its satellite assets and experience, including developing innovative direct-to-device (D2D) solutions," EchoStar said. "US consumers will benefit from EchoStar's ability to focus more clearly on enhancing and further deploying its nationwide 5G Open RAN wireless network, which will provide more choices and better service to consumers under the Boost Mobile brand, while driving innovation at a faster pace."

DirecTV buying Dish and Sling video business

The video distribution business unit being purchased by DirecTV is called Dish DBS and includes both Dish TV and Sling TV.

"Under the terms of the purchase agreement, DirecTV will acquire EchoStar's video distribution business, including Dish TV and Sling TV, in exchange for a nominal consideration of $1 plus the assumption of Dish DBS net debt," the announcement said. "Dish Network will also benefit from the releases of a substantial amount of intercompany receivables, including spectrum, but will have contractually limited access to the cash flow generated by its business between signing and closing."

The exchange of $9.75 billion in debt will require "certain consents from the holders of such notes to facilitate the acquisition," the companies said.

"Dish and DirecTV are launching an exchange offer at a discounted rate for the debt to help extend the maturities," Reuters wrote. "For the deal to go through, Dish DBS debtholders will have to agree to take a haircut on the debt by about $1.57 billion. With the exchange offer, Dish is attempting to convince its bondholders to become holders in the merged entity."

The companies' announcement states that if noteholders reject the terms, DirecTV "has the right to terminate the acquisition without closing."

AT&T bought DirecTV for $48.5 billion in 2015. But after years of major subscriber losses, AT&T spun off the satellite TV division into a new entity and retained 70 percent ownership. AT&T was exploring options for selling the 70 percent stake about a year ago and is now slated to get a quick $2 billion from TPG and more later.

"Under the terms of the transaction, TPG will make an initial payment of $2.0 billion, subject to certain deductions, to AT&T during 2025 and additional payments to AT&T totaling $500 million in 2029," the TPG announcement said. "AT&T expects to receive approximately $7.6 billion in cash payments from DirecTV through 2029. The transaction also contemplates that DirecTV will make a special distribution prior to March 31, 2025, of at least $1.625 billion that will be paid to the equity holders of DirecTV, proportional to their respective ownership positions."

The TPG/AT&T deal is expected to close in the second half of 2025.