Satellite TV giant DirecTV said it would withdraw from Charlie Ergen’s Echostar acquisition of video distribution business DishDBS, including Dish TV and Sling TV, due to bondholders’ opposition to the debt swap. Abandoning the contract.
Under the complex historic deal, which would have created the largest pay-TV distributor in the US with more than 19 million subscribers, DirecTV was set to pay EchoStar a $1 plus debt assumption. .
DirecTV CEO Bill Morrow said in a statement, “While we believed the combination of DirecTV and Dish would benefit all stakeholders, we terminated the transaction because the proposed terms of the exchange affected DirecTV’s balance sheet. SHEET and were essential to protect our operational flexibility.” “DirecTV will continue to advance our mission of aggregating, curating and distributing content tailored to consumers’ interests by pursuing innovative products and providing consumers with additional choice, flexibility and control. We look forward to a strong balance sheet and our long-term partner TPG are well positioned for the future with the support of
The deal was decades in the making, but a group of Dish bondholders recently rejected a proposed debt swap offer that DirecTV had made a condition of the transaction. A discount rate swap would have extended the debt’s maturity but forced bondholders to accept a financial “haircut” of more than $1.5 billion.
DirecTV predicted the combination could generate at least $1 billion per year in cost synergies. The deal was seen as more likely to win regulatory approval amid the rise of streaming services and a decline in pay-TV subscribers due to cord-cutting.
EchoStar also recently unveiled the “successful completion of various transformative strategic transactions positioning its business to further expand its nationwide Open RAN 5G network.” The transaction includes restructuring about $5 billion in debt and adding $5.2 billion in “fresh capital” to its balance sheet.
DirecTV says ending the Dish deal won’t affect TPG’s deal to buy the 70 percent of the company it doesn’t own from AT&T, and that deal is still set to close next year.
Credit : www.hollywoodreporter.com
