DirecTV Abandons Dish Acquisition After Bondholders Reject Proposal

DirecTV has terminated its deal with EchoStar to acquire Dish DBS following bondholders’ opposition to the debt-exchange proposal. The merger would have created the largest U.S. pay-TV provider, with DirecTV assuming EchoStar’s debt.

“While we believed a combination of DirecTV and DISH would have benefitted all stakeholders, we have terminated the transaction because the proposed Exchange Terms were necessary to protect DirecTV’s balance sheet and our operational flexibility,” said DirecTV CEO Bill Morrow in a statement. “DirecTV will advance our mission to aggregate, curate, and distribute content tailored to customers’ interests by pursuing innovative products and providing customers with additional choice, flexibility, and control. We are well positioned for the future with a strong balance sheet and support from our long-term partner TPG.”

EchoStar stock previously plunged 13% last week on the news that bondholders of subsidiary Dish Network rejected a proposed debt deal seen as key to sealing a merger with satellite rival DirecTV.

Shares fell to $22.76, their lowest level since early September, on triple their normal trading volume. On September 30, Dish and DirecTV had declared their intention to merge and create the largest U.S. pay-TV provider. While regulators thwarted previous attempts at a combination on anti-competitive grounds, the ravages of cord-cutting have left both players smaller and less dominant, thereby making approval this time arguably more likely.

Dish and EchoStar merged in January and the combined company has pursued a telco-oriented strategy, steering away from pay-TV in a bid to challenge establish players AT&T, Verizon and T-Mobile. With a large debt load and repayments looming, EchoStar has been trying to negotiate with lenders in order to stave off a potential bankruptcy.

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