Dish, DirecTV Merger Dead Before It Even Has The Chance To Disappoint
from the too-bad-so-sad dept
After literally decades of rumor and speculation, fading satellite TV companies Dish and DirecTV finally recently announced they had proposed a pointless merger in a last gasp for relevance. Once blocked by regulatory worries about competitive impact, executives at both companies had long dreamed of combining the two companies into one, still broadly unremarkable company.
The deal proposed last month involved DirecTV acquiring Dish for one dollar, in addition to $9.75 billion in Dish’s debt. The deal was poised to combine Dish’s 8.1 million (and shrinking) subscriber base with DirecTV’s 11 million (and shrinking) subscriber base in the hopes of creating something semi-interesting.
But, alas, it was never meant to be. DirecTV late last week announced it would be terminating the deal after Dish bondholders refused to accept what they insisted was a loss on the value of the debt:
“Dish bondholders quickly objected to terms requiring them to take a loss on the value of their debt. DirecTV had said Dish notes would be exchanged with “a reduced principal amount of DirecTV debt which will have terms and collateral that mirror DirecTV’s existing secured debt.” The principal amount would have been reduced by at least $1.568 billion.”
Now both companies can slowly die a natural death as nature intended, never even getting to the most exciting part of pointless U.S. consolidation: the bit where companies lie and promise untold new synergies and job creation before laying off thousands of employees, raising consumer prices to recoup debt, and ultimately fielding an even worse product than either company was capable of individually.
Dish is still hoping to pivot into a streaming video and wireless phone company, but neither effort has proven to be all that fruitful, and bankruptcy remains a very real possibility without a fair amount of luck.
Filed Under: broadcast, consolidation, media, mergers, satellite, telecom, tv
Companies: directv, dish
Comments on “Dish, DirecTV Merger Dead Before It Even Has The Chance To Disappoint”
The magical world of finance when you buy debt to bet on the company losses, and get rich if the company dies…
Reading about the difficulties seen within the cable/sat tv industry, I am reminded of an old theory regarding this oft repeated sequence of events.
Dead Horse Theory
https://www.reddit.com/r/antiwork/comments/he4p3c/the_dead_horse_theory/#lightbox
Merger proposal is all wrong
The merger terms are absolutly stupid if they wanted it to succeed. Bond holders should have been offered a debt for equity swap. Dish owed $9Billion and did not want to take a discount, but that debt will be worthless if the company fails. So the discount should be given and upside incentive. If the merger could improve the health of the combined companies the value of the stock would increase. They might even get dividends, and increase in stock value combined could cover all the debt with a net profit. Now, there may be stuff behind the magic curtain that precludes this, but it better than refusing the haircut that will not help anyone.
This will exacerbate the digital divide
There are still many, many places in this country where satellite TV is the only viable option. Places that don’t have reliable cell phone service, if any. Places too sparsely populated to make cable TV or wired internet profitable. These services will continue to lose customers to streaming services only where their internet connection speed and reliability make streaming possible. Starlink is too expensive for the average person now using satellite TV.