DirecTV to buy debt-laden rival Dish for $1 after decades-long pursuit

DirecTV agreed to buy satellite rival Dish network Monday, ending decades of on-and-off talks in a deal that will create one of the country’s largest pay TV distributors with a combined 20 million subscribers.Dish, owned by EchoStar, has been weighed down with billions of dollars of debt and faced the prospect of a looming bankruptcy.As part of the two-step transaction, DirecTV will pay $1 to buy EchoStar’s TV business called Dish DBS that includes Dish and Sling TV, while agreeing to assume about $9.75 billion of Dish’s debt, the companies said.Dish and DirecTV are launching an exchange offer at a discounted rate for the debt to help extend the maturities.The deal comes at a time when the two services are hemorrhaging subscribers amid the rising popularity of streaming services like Netflix.DirecTV CEO Bill Morrow told Reuters on Monday that the combined pay TV company would have the muscle to negotiate smaller programming packages tailored to consumers’ interests.Morrow plans to offer a streamlined viewer experience that makes it easier for customers to manage their subscriptions all from one place.

“We believe that consumers don’t want to be the aggregators — or at least a majority of consumers in the marketplace would not prefer to have to go out and manage all these multiple accounts of those direct-to-consumer SVOD [subscription video-on-demand] services,” Morrow said.For the deal to go through, Dish DBS debtholders will have to agree to take a haircut on the debt by about $1.57 billion.With the exchange offer, Dish is attempting to convince its bondholders to become holders in the merged entity.The deal will provide a crucial lifeline to EchoStar, which was co-founded by telecommunications entrepreneur Charlie Ergen and is currently saddled with more than $20 billion in debt.

EchoStar will receive $2.5 billion of financing from buyout firm TPG’s credit unit Angelo Gordon and DirecTV to help pay off Dish’s $2 billion bond that is due in...