DirecTV cancels acquisition of satellite TV rival Dish – as lenders revolt

Satellite TV giant DirecTV canceled its deal with Charlie Ergen’s EchoStar to buy TV rival Dish TV and other assets.

The deal would create one of the largest pay TV distributors in the country with a total of 20 million subscribers. As part of the deal, DirecTV was set to pay EchoStar $1 for the pay-TV business called Dish DBS, which included Dish and Sling, as well as assuming about $9.75 billion of Dish’s debt.

In addition, Dish bondholders had to agree to exchange their debt for new debt in the merged company at a discounted rate, taking a haircut of about $1.57 billion on the debt. Dish bondholders recently rejected that proposal.

“We have completed the transaction because the terms of the proposed exchange were necessary to protect DirecTV’s balance sheet and our operational flexibility,” Bill Morrow, CEO of DirecTV, said Thursday.

Morrow added: “DirecTV will advance our mission to aggregate, curate and distribute content tailored to customers’ interests by pursuing innovative products and offering customers additional choice, flexibility and control.”

The CEO said the termination of the deal would take effect on Friday.

EchoStar did not immediately respond to a request for comment.

Axios first reported the deal’s completion earlier Thursday.

The proposed deal, which was first announced in September, was seen as a strategic move to consolidate a shrinking pay-TV market that has been hit hard by the popularity of streaming.

It would also have provided a lifeline for EchoStar, which was co-founded by telecommunications entrepreneur Ergen and is currently saddled with more than $20 billion in debt.

DirecTV and Dish have held talks off and on over the years. This is the second time that a merger between the two entities fails to materialize.

The companies tried to combine in 2002 for $26 billion, but the deal was blocked by regulators in the George W. Bush administration over concerns it would reduce competition.

But those concerns would not have been a factor this time, given the rapid decline in the satellite TV business.