DirecTV to buy EchoStar video unit in debt exchange

DirecTV said Monday it agreed to acquire EchoStar’s video distribution business, including Dish TV and Sling TV, in a debt exchange transaction. The deal calls for DirecTV to pay a nominal $1 and assume about $9.75 billion of Dish DBS net debt, shifting a substantial liability off EchoStar’s balance sheet.

The companies said in a joint statement that the combination is intended to create a stronger U.S. video competitor at a time when streaming services owned by large technology companies and programmers have reshaped the market for television distribution. The announcement followed recent reports by The Wall Street Journal and other media outlets that a transaction was under discussion.

The structure differs from a conventional cash acquisition. Rather than paying a large purchase price to EchoStar, DirecTV will take on the specified debt associated with Dish DBS. For EchoStar, the companies said the transaction would reduce total consolidated debt by about $11.8 billion at closing and cut refinancing needs through 2026 by about $6.7 billion.

Dish TV and Sling TV are central to EchoStar’s video distribution operations. Dish TV is the company’s traditional pay-TV service, while Sling TV operates in internet-delivered live television. DirecTV, another satellite-TV provider, would bring those assets under its ownership if the agreed transaction closes.

The companies framed the deal as a response to structural pressure in U.S. video distribution. Traditional pay-TV businesses have faced competition from streaming platforms, including services linked to large technology groups and content owners. In their statement, DirecTV and EchoStar said the transaction would benefit U.S. video consumers by creating a more substantial competitive force in that market.

For EchoStar, the stated balance-sheet effect is a key element of the transaction. A reduction in consolidated debt of about $11.8 billion would exceed the net debt DirecTV is set to assume, according to the companies’ figures. The reduction in refinancing needs through 2026 would also address near-term debt maturities or funding requirements that EchoStar otherwise expected to handle.

Investors marked EchoStar shares higher before the open. The stock was up 1.7% in premarket trading Monday, according to MarketWatch data cited in the report. EchoStar shares had gained 69.2% for the year to date at that point, compared with a 20.3% rise for the S&P 500.

The companies did not disclose additional financial consideration beyond the $1 payment and DirecTV’s assumption of about $9.75 billion in Dish DBS net debt in the reported terms. They also did not provide further details in the cited statement on timing, approvals or integration plans.

This story draws on original reporting from MarketWatch.