Satellite TV company DirecTV is walking away from a previously agreed merger with rival Dish. The move is reportedly a result of Dish lenders rejecting the proposal to take a loss on their debt holdings.
After several previous failed tie-in attempts, it appeared that DirecTV and Dish would finally join forces. DirecTV agreed to acquire Dish and several other related TV businesses from its owner, Echostar, for $1 in September while assuming its $9.75 billion debt.
However, in order for the transaction to come through, Dish lenders needed to exchange their existing debt for debt in the new entity at a discount rate and take around $1.57 billion loss.
According to DirecTV CEO Bill Morrow, the company was forced to pull the plug on the deal since assuming the debt at its current rate would jeopardize its balance sheet and operational flexibility.
“We have terminated the transaction because the proposed exchange terms were necessary to protect DirecTV’s balance sheet and our operational flexibility,” Morrow said in a statement.
The merger between DirecTV, which has 10 million subscribers, and Dish, which has eight million subscribers, would create one of the largest pay-TV distributors in the nation. The two companies saw the tie-in as a way to improve their position on the market in the streaming era and have more negotiating power.