DirecTV has today announced that it will acquire Dish for just $1.
Or, more accurately, $1 plus a mountainous backlog of debt. Since the mid-2010s, both pay-TV services have been rapidly shedding subscribers in the midst of the streaming wars as people turn to services like Netflix and Amazon Prime for their television fix.
Through the new merger, DirecTV will take responsibility for Dish’s approximately $9.75 billion in debt to create the biggest pay-TV merger in the United States—a scale-based play intended to entice consumers back to pay-TV through lowered prices.
“DirecTV operates in a highly competitive video distribution industry,” said the company’s CEO, Bill Morrow, in a press release. “With greater scale, we expect a combined DirecTV and Dish will be better able to work with programmers to realize our vision for the future of TV, which is to aggregate, curate, and distribute content tailored to customers’ interests, and to be better positioned to realize operating efficiencies while creating value for customers through additional investment.”
Why does this feel like a rerun?
This isn’t actually the first time that a DirecTV and Dish merger was proposed. Back in 2002, the parent companies of the two pay-TV services tried to advance a $19 billion deal to join forces.
At the time, though, traditional cable and satellite pay television still ruled the industry, and the deal was considered anticompetitive. Both the Justice Department’s antitrust division and the Federal Communications Commission (FCC) ruled against the merger, ultimately stalling it in its tracks and forcing EchoStar, Dish’s parent company, to pay a $600 million breakup fee.
Now, over two decades later, business looks a bit different for DirecTV and Dish. Since the mid-2010s, the practice of cord-cutting—or abandoning pay-TV for streaming services—has taken a major chunk out of their subscriber bases, leaving both companies struggling to compete.
According to today’s press release, DirecTV and Dish have collectively lost 63% of their satellite customers since 2016, and traditional pay-TV saturation in U.S. households is now less than 50%.
“Content that was historically the mainstay of traditional pay-TV—news, sports, and entertainment—is now available exclusively or first-run on direct-to-consumer streaming services,” the release adds.
Through this new merger, DirecTV hopes to be able to offer “smaller packages at lower price points” and to “bring together multiple content sources in one easily accessible place”—essentially mimicking what people like about streaming competitors.
According to the companies, the deal is expected to officially close in late 2025 and thereafter “generate cost synergies of at least $1 billion per annum.” The merger is still subject to regulatory approval and various other closing conditions.