EchoStar nears deal to promote Dish to DirecTV with $2 billion debt fee looming, sources say

Charlie Ergen is getting near promoting the pay-TV enterprise he based greater than 40 years in the past.

EchoStar is in superior talks to promote satellite tv for pc TV supplier Dish Community to rival DirecTV, the carefully held pay TV operator owned by private-equity agency TPG and AT&T, in accordance with folks accustomed to the matter. Whereas the perimeters hope to finish a deal by Monday, no deal is assured, and the talks should disintegrate, mentioned the folks, who requested to not be named as a result of the discussions are non-public.

The mixture of Dish and DirecTV has been rumored for years and almost occurred in 2002 till it collapsed under regulatory pressure. This time, the deal is being pushed by EchoStar’s need to repay $1.98 billion of debt that matures in November, mentioned two of the folks accustomed to the method. EchoStar had simply $521 million in money and money equivalents and marketable funding securities as of June 30 and forecast destructive money flows for the rest of 2024, in accordance with public filings.

The prospect of a future EchoStar chapter and deal approval from collectors make the completion of a deal difficult. Dish tried to refinance a few of its debt earlier this week with bondholders, however the negotiations failed, in accordance with a Sept. 23 filing.

The corporate mentioned in public filings it stays in discussions with different debtholders.

A possible DirecTV-Dish transaction is being structured as all money, with DirecTV paying EchoStar for the satellite tv for pc TV enterprise, its digital enterprise Sling and related liabilities, mentioned folks accustomed to the matter. All in, the transaction could also be value greater than $9 billion, in accordance with one of many folks.

A spokesperson for DirecTV declined to remark. A spokesperson for Dish could not instantly be reached for remark.

“The underside line is that we now see chapter within the subsequent 4 to 6 months because the most certainly consequence [for EchoStar],” MoffettNathanson’s Craig Moffett mentioned in a observe to purchasers in August. “They might want to elevate new capital.”

EchoStar has a complete enterprise worth of about $31 billion and a market capitalization of about $7.6 billion. There is no such thing as a wi-fi spectrum concerned within the proposed deal, which Dish Community has spent the previous decade accumulating in its quest to transition right into a wi-fi firm, the folks mentioned.

Satellite tv for pc TV, as soon as a few of the greatest distributors of the TV bundle, has been declining for years — usually at a quicker charge than cable opponents — as customers swap to subscription streaming companies resembling Netflix, Disney+ and Amazon Prime Video. Dish ended its final quarter with 6.1 million satellite tv for pc subscribers and a pair of million clients for Sling TV, Dish’s over-the-internet package deal of linear networks.

DirecTV has additionally felt the ache, shedding tens of millions of subscribers since AT&T purchased the corporate in 2015 for $67 billion with debt. AT&T spun it out in 2021 and bought a portion of the corporate to TPG. At the moment, DirecTV had roughly 15.4 million subscribers. It has about 11 million at present, CNBC beforehand reported.

The corporate has just lately been focused on constructing out its streaming enterprise, centering its newest advert marketing campaign round dispelling the assumption that DirecTV is barely accessible by way of a satellite tv for pc dish. MoffettNathanson estimates DirecTV added greater than 20,000 streaming clients earlier this yr. The majority of its clients nonetheless use satellite tv for pc dishes.

Most just lately, DirecTV was in a distribution fight with Disney, which noticed networks together with ESPN go darkish for almost two weeks for the satellite tv for pc TV firm’s clients. The 2 firms reached a deal that provides DirecTV the flexibility to supply skinnier, genre-specific bundles.

— CNBC’s Lillian Rizzo contributed to this report.