By (Reuters) – Satellite TV provider DirecTV said on Tuesday it will abandon its planned acquisition of EchoStar’s satellite television business that includes Dish TV by Nov. 22 if bondholders don’t agree to a debt exchange.
A group of Dish bondholders on Monday rejected the proposed debt-exchange offer from DirecTV that was contingent upon them accepting a “haircut” of $1.5 billion.
“A successful exchange was a condition for acquiring the Dish video business,” a DirecTV spokesperson told Reuters in an emailed statement.
“Given the outcome of the EchoStar exchange, DirecTV will have no choice but to terminate the acquisition of Dish by midnight on Nov. 22.”
EchoStar and Dish did not immediately respond to Reuters requests for comment.
The proposed deal, initially announced in September, was seen as a strategic consolidation in a shrinking pay-TV market as both DirecTV and Dish face intensifying competition from streaming services.
As part of the two-step transaction, DirecTV was to pay $1 to buy the pay TV business called Dish DBS that includes Dish and Sling TV, while agreeing to assume about $9.75 billion of Dish’s debt. Dish and DirecTV launched an exchange offer at a discounted rate for the debt to help extend the maturities.
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.
