FILE - This file combo made from file photos shows the AT&T logo on the side of a corporate office in Springfield, Ill., left, and a DirecTV satellite dish atop a home in Los Angeles.is selling its 70% stake in DirecTV in a seismic deal for the satellite television world that will make the combined provider the biggest pay-TV provider in the U.S.
Under the terms of the transaction, DirecTV will acquire Dish from its owner EchoStar Corp. for a nominal consideration of $1 plus the assumption of about $9.75 billion of Dish debt, according to a statement on Monday that confirmed previous Bloomberg News reporting.The deal is contingent upon Dish’s bondholders agreeing to take a haircut on the principal amount of the company’s debt of at least $1.568 billion, the statement shows.
The merger of DirecTV and Dish has been “not a matter of if, only a matter of when,” according to DirecTV Chief Executive Officer Bill Morrow. It’s expected to help the companies survive by giving a combined entity more leverage in negotiations with programmers.“We want to use our influence to tell the programmers: we are the only pure-play, video-focused entity that’s content agnostic so let us serve a consumer interest that you cannot,” Morrow said in an interview.
The combination of DirecTV and Dish has the potential to generate cost synergies of at least $1 billion per annum. The merged company will be called DirecTV but continue to market the Dish TV and Sling TV brands. It will be led by Morrow.TPG Angelo Gordon and some of its co-investors, as well as DirecTV, have agreed to provide $2.5 billion of financing to EchoStar to fully refinance Dish debt maturing in November 2024, according to Monday’s statement.
PJT Partners Inc. is acting as lead financial adviser to DirecTV and Barclays Plc is lead financial adviser to TPG. JPMorgan Chase & Co. is acting as lead financial adviser to Dish, while Bank of America Corp., Evercore Inc., LionTree Advisors and Morgan Stanley are also providing financial advice to DirecTV and TPG.