DirecTV has notified EchoStar Corp. of its intention to terminate an acquisition of Dish Network Corp. after it failed to win the consent of bondholders for a key debt exchange, all but killing a deal to create the largest U.S. pay-TV service.
DirecTV, which warned this month it would terminate the deal by midnight Friday without an agreement on the debt, said it had given EchoStar formal notice. Dish hadn’t initiated fresh discussions with bondholders to try to salvage the deal as of late Thursday evening, a person familiar with the matter said.
Under the terms of the original transaction, DirecTV was to acquire Dish and Sling TV from EchoStar Corp. for $1 plus the assumption of about $9.75 billion of debt. DirecTV, which is owned by AT&T Inc. and joint venture partner TPG Inc., would have become the largest pay-TV provider in the United States with about 18 million subscribers.
“While we believed a combination of DirecTV and Dish would have benefited all stakeholders, we have terminated the transaction because the proposed Exchange Terms were necessary to protect DirecTV’s balance sheet and our operational flexibility,” DirecTV Chief Executive Officer Bill Morrow said in a statement.
A group of Dish bondholders rejected an improved offer put forward by DirecTV at the end of October. The revised terms lowered the minimum loss on $8.9 billion of bonds by $70 million to $1.5 billion.
The action doesn’t affect TPG’s planned acquisition of AT&T’s stake in DirecTV. Axios reported earlier on DirecTV’s plans.
Griffis and Basu write from Bloomberg.