Charlie Ergen, president and co-founder of Dish Network Corp.
Jonathan Alcorn | Bloomberg | Getty Images
Charlie Ergen is close to selling the pay TV company he founded more than 40 years ago.
EchoStar is in advanced talks to sell satellite TV provider Dish Network to rival DirecTV, the pay TV operator owned by private equity firm TPG and AT&T, according to people familiar with the matter. Although both sides hope to reach an agreement by Monday, no deal is assured and negotiations could still break down, said the people, who asked to remain anonymous because the discussions are private.
The combination of Dish and DirecTV has been rumored for years and almost happened in 2002 until it collapsed under regulatory pressure. This time, the deal is driven by EchoStar’s desire to repay $1.98 billion in debt maturing in November, two of the people familiar with the process said. EchoStar had just $521 million in cash and cash equivalents and marketable investment securities as of June 30 and projected negative cash flow for the remainder of 2024, according to public filings.
The prospect of EchoStar’s future bankruptcy and approval of the transaction by creditors make it difficult to close a deal. Dish attempted to refinance some of its debt earlier this week with bondholders, but negotiations failed, according to a Filing September 23.
The company said in public filings that it remains in discussions with other creditors.
A potential DirecTV-Dish transaction is structured all-cash, with DirecTV paying EchoStar for the satellite TV business, its Sling digital business and related liabilities, people familiar with the matter said.. In total, the transaction could be worth more than $9 billion, according to one of the sources.
A DirecTV spokesperson declined to comment. A Dish spokesperson could not immediately be reached for comment.
“Ultimately, we now view bankruptcy within the next four to six months as the most likely outcome (for EchoStar),” Craig Moffett of MoffettNathanson said in a note to clients in August. “They will have to raise new capital.”
EchoStar has a total enterprise value of approximately $31 billion and a market capitalization of approximately $7.6 billion. No wireless spectrum is involved in the proposed deal, which Dish Network has spent the last decade accumulating in its quest to transition into a wireless business, the sources said.
Satellite television, once one of the largest distributors of TV packages, has been in decline for years – often at a faster rate than cable competitors – as consumers turn to subscription streaming services such as Netflix, Disney+ And Amazon Main video. Dish ended its latest quarter with 6.1 million satellite subscribers and 2 million customers for Sling TV, Dish’s linear Internet network offering.
DirecTV has also felt the pain, losing millions of subscribers since AT&T bought the company in 2015 for $67 billion with debt. AT&T spun it off in 2021 and sold part of the company to TPG. At that time, DirecTV had approximately 15.4 million subscribers. It now has about 11 million, CNBC previously reported.
The company was recently concentrate on growing its streaming business, centering its latest ad campaign on dispelling the belief that DirecTV is only available via satellite dish. MoffettNathanson estimates that DirecTV added more than 20,000 streaming customers earlier this year. The majority of its customers still use satellite dishes.
More recently, DirecTV was in a situation struggle for distribution with Disney, which saw networks including ESPN go dark for nearly two weeks for the satellite TV company’s customers. The two companies struck a deal that gives DirecTV the ability to offer thinner, genre-specific bundles.
— CNBC’s Lillian Rizzo contributed to this report.
