DirecTV and Dish are close to entering into a merger agreement

DirecTV and Dish are in advanced discussions about a merger that would create the largest U.S. pay-TV provider with nearly 20 million subscribers, people familiar with the matter said.

A deal could be announced in the coming days, according to the people, who spoke on condition of anonymity to discuss confidential information. DirecTV is in discussions about control of the combined company, which will be closely held, the people said.

Founded in 1994 by Hughes Electronics, DirecTV is owned by AT&T Inc. and TPG Inc. and has about 11 million customers. Dish was founded in 1980 by billionaire Charlie Ergen and is part of his EchoStar Corp. and has about 8 million subscribers. EchoStar and TPG are expected to remain investors, the people said.

The companies are still working on details about how the merger might be structured, according to the people. Although talks have progressed, they could still be delayed or stalled, the people said. Bloomberg News reported talks between the parties earlier this month.

A representative for TPG declined to comment, while a representative for DirecTV said the company does not comment on “rumors and speculation.” A representative for Dish did not immediately respond to requests for comment.

While previous discussions about a DirecTV-Dish merger have faced antitrust concerns, the shift from pay TV to streaming has changed the competitive landscape and may make the path easier this time. A deal would help them better compete with cable companies and streaming services like Netflix Inc.

A merger of the two largest satellite television providers would come at a difficult time for the pay-TV industry, which is losing customers. It would also put paid to years of speculation about consolidation in the satellite TV business. EchoStar only completed its acquisition of Dish in December.

According to Bloomberg Intelligence, the pay-TV industry, including cable and satellite, had 104 million subscribers in the U.S. in 2015. That number has shrunk to fewer than 70 million this year as services like Netflix and Amazon Prime Video have added viewers.

To take the TV business off the books, AT&T entered DirecTV into a joint venture with private equity investor TPG in August 2021, valuing the company at about $16 billion. AT&T held 70% while TPG received 30%. Due to subscriber losses, AT&T took a $15.5 billion impairment charge in 2020 to offset the lower value of operations.

Dish, meanwhile, is trying to transition from pay TV to wireless services, but has racked up significant debt to buy spectrum as its legacy business loses subscribers.

Davis writes for Bloomberg News.