DirecTV, Dish are close to clinching merger agreement

DirecTV and Dish are in advanced talks to merge in a deal that would create the largest U.S. pay-TV provider, with almost 20 million subscribers, people familiar with the matter said.
An agreement could be announced in the coming days, according to the people, who asked not to be identified discussing confidential information. DirecTV is in talks to control the combined entity, which will be closely held, the people said.
DirecTV, founded in 1994 by Hughes Electronics, is owned by AT&T Inc. and TPG Inc., and has about 11 million customers. Dish, started in 1980 by billionaire Charlie Ergen, is part of his EchoStar Corp. and has about 8 million subscribers. EchoStar and TPG are expected to remain investors, the people said.
The companies are still working through details of how the combination might be structured, according to the people. While talks are advanced, they could still be delayed or falter, the people said. Bloomberg News reported talks between the parties earlier this month.
A representative for TPG declined to comment, while a representative for DirecTV said the company does not comment on “rumors and speculation.” A representative for Dish didn’t immediately respond to requests for comment.
While past discussions of a DirecTV-Dish combination have faced antitrust concerns, the shift from pay TV to streaming has changed the competitive landscape, potentially making the path easier this time. A deal would help them better compete with cable companies and streaming services such as Netflix Inc.
A merger of the two largest satellite-TV providers would come at a challenging time for the pay-TV industry, which has been losing customers. It would also cap years of speculation about consolidation in the satellite-TV business. EchoStar just closed its acquisition of Dish in December.
The pay-TV industry, including cable and satellite, had 104 million U.S. subscribers in 2015, according to data compiled by Bloomberg Intelligence. That has shrunk to fewer than 70 million this year as services including Netflix and Amazon Prime video have scooped up viewers.
In August 2021, to get the TV business off its books, AT&T moved DirecTV into a joint venture with private equity investor TPG in a deal that valued the company at about $16 billion. AT&T held 70% while TPG received 30%. Due to subscriber losses, AT&T took a $15.5 billion impairment charge in 2020 to account for the lower value of the operation.
Dish, meanwhile, has been seeking to transition from pay-TV to wireless services but has racked up significant debt to buy spectrum while the legacy business loses subscribers.
Davis writes for Bloomberg News.