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DirecTV and EchoStar, the two largest satellite TV providers in the US, have finally agreed to merge.
The reasoning given it to adapt to a broadcasting landscape controlled by tech firms and streaming services.
Yesterday DirecTV revealed it will acquire Dish TV and Sling TV from EchoStar for $1, while also assuming $9.75 billion in debt.
We're thrilled to announce that DIRECTV is acquiring DISH TV and Sling TV!
This strategic move is expected to provide customers with compelling video options and allow us to accelerate our vision for the future of TV.
Learn more at https://t.co/s73lWG4Vmf 🎥📡 #BrighterTVFuture pic.twitter.com/cqkX4yeVfH
— DIRECTV News (@DIRECTVnews) September 30, 2024
AT&T will sell its 70% stake in DirecTV to TPG, which owns the remaining 30%, for $7.6 billion as part of the deal. Once the transaction has been completed, Bill Morrow will remain as CEO of DirecTV, which will be headquartered in El Segundo, California. If combined, the merged service would boast about 20 million subscribers, with DirecTV contributing over 11 million. This is significantly less than DirecTV’s peak of 20.3 million subscribers in 2015 when AT&T acquired a majority stake.
The deal awaits approval from federal regulators, who have intensified antitrust actions under President Joe Biden. Expected to close in the fourth quarter of 2025, the transaction will end years of intermittent discussions about merging satellite services.
A Long-Awaited Solution
Speculation and rumors of the merger have been ongoing for years. The satellite companies tried to merge back in 2002 when EchoStar sought to buy DirecTV from its former owner Hughes Electronics. The deal failed after the Federal Communications Commission blocked it and the Department of Justice sued to prevent a monopoly in areas lacking cable access. EchoStar paid a $600 million breakup fee.
Since then, the video distribution industry has transformed significantly. The companies have faced challenges in retaining subscribers due to competition from streaming services like Netflix, Amazon Prime Video, and Hulu, along with Elon Musk’s Starlink, which attract millions with lower prices. This decline in the satellite TV sector has made the current merger essential for survival.
Still, executives noted that the merger would enhance competition for television and wireless network customers, rather than diminish it.
The merged DirecTV and Dish entity will retain the Dish brand and has no plans to change Dish or Sling TV, so existing Dish customers need not worry about switching to DirecTV.
I hope prices don’t go up. Because of this.
— Ivan Martinez 이반 (@IvanMartinezNie) September 30, 2024
The statement also highlighted that merging DirecTV and Dish would increase scale, allowing DirecTV to offer smaller packages at reduced prices. However, many users are concerned that prices will rise.
