DirecTV is acquiring DISH through a $9.75 billion debt exchange transaction. This deal, pending approval, would create a monopoly in the satellite television industry. Ironically, it would also contribute to the FCC's 5G buildout goals by rescuing EchoStar, the current owner of DISH, from bankruptcy.
The agreement is dense but fairly straightforward. DirecTV will own EchoStar's television assets and liabilities—DISH, Sling TV, plus $9.75 billion in debt. Non-television assets, including Boost Mobile, will stay under EchoStar's auspice. It's worth noting that DirecTV is now just partially owned by AT&T, and it will be fully owned by a private equity firm called TPG in 2029.
DirecTV and DISH are the only satellite television providers in the United States. They aren't just proposing a merger; they're proposing a monopoly. And, importantly, this monopoly has been over two decades in the making. A $19 billion DirecTV-DISH merger was blocked by the FCC in 2002, and a similar proposal was under consideration as recently as 2020.
That said, the consequences of a satellite television monopoly may be negligible in 2024. DirecTV and DISH have struggled to navigate the streaming era and are losing millions of subscribers each year. Rural markets that lack internet access are still a safe haven for satellite TV, but this is set to change as the U.S. government pushes for nationwide 5G and satellite internet coverage. If the goals of the Internet for All initiative are met, every American will have access to high-speed internet by 2030, meaning that satellite television will lose its grasp on rural markets.
Ironically, the proposed merger actually contributes to Internet for All. EchoStar, the owner of DISH, was recently hand-picked to become the United States' fourth major mobile carrier (effectively filling the void left by Sprint). The company is bound by several federal obligations, including deadlines for coast-to-coast 5G buildout. However, DISH's debt has jeopardized EchoStar's 5G deployment. DirecTV's offer to take on DISH's debt could appeal to the federal government's long-term goals and alleviate anticompetitive concerns.
Regulators may see no reason to intercept DirecTV's acquisition of DISH. After all, the long-term effects of this deal appear to be mostly positive. Still, a monopoly is a monopoly. Satellite TV will retain its grasp on rural markets for at least five more years, and subscribers could experience increased prices or other negative effects if this deal comes to fruition. For its part, DirecTV claims that the merger "will benefit U.S. video consumers by creating a more robust competitive force in a video industry dominated by streaming services."
Source: DirecTV