EchoStar (SATS) announced that it will sell its satellite television business, DISH DBS Corp. (DBS), including Sling TV, to DirecTV, forming one of the largest pay-TV distributors in the U.S. This pay-TV distributor will have a combined subscriber base of 20 million.
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Details of EchoStar’s Sale of its Satellite TV Business
The deal will take place in two steps. As part of the agreement, DirecTV will pay $1 to acquire Dish DBS and assume approximately $9.75 billion of Dish’s debt. The transaction is expected to close in the fourth quarter of 2025.
In addition, DirecTV and Dish are launching an exchange offer for five different series of convertible notes at a discounted rate with a face value of $9.75 billion. For this deal to proceed, Dish DBS debtholders must agree to a “haircut” of about $1.57 billion on the debt. A debt haircut involves a reduction in the principal or interest amount that will be paid back to creditors.
By offering this exchange, Dish aims to convince its bondholders to become stakeholders in the merged entity.
EchoStar Will Also Get a Lifeline from this Deal
The sale also provides a vital financial lifeline to EchoStar, a satellite communications provider. Burdened by more than $20 billion in debt, EchoStar will receive $2.5 billion in financing from TPG’s credit unit Angelo Gordon and DirecTV, specifically to address Dish’s $2 billion bond due in November.
This arrangement is expected to reduce EchoStar’s total consolidated debt by $11.7 billion and decrease its refinancing needs by $6.7 billion through 2026.
Why Is DirecTV Acquiring EchoStar’s Dish TV?
Moreover, the deal comes at a time when both DirecTV and Dish are losing significant market share to streaming giants like Netflix (NFLX) and Amazon’s Prime Video (AMZN), which have capitalized on the rising popularity of streaming services.
DirecTV’s CEO, Bill Morrow, explained in an interview with Reuters that the newly merged pay-TV company will have greater leverage to negotiate smaller, more targeted programming packages tailored to consumer interests. Furthermore, the combined entity plans to offer an improved viewing experience to its subscribers, making it easier to find their favorite content.
After years of on-and-off negotiations, DirecTV and Dish have finally reached an important milestone, with this merger representing a major breakthrough.
Is SATS a Good Stock to Buy?
Analysts remain sidelined about SATS stock, with a Hold consensus rating based on two Buys and Holds each, and one Sell. Over the past year, SATS has surged by more than 40%, and the average SATS price target of $22.40 implies a downside potential of 20.1% from current levels.
