After literally decades of rumor and speculation, fading satellite TV companies Dish and DirecTV finally recently announced they had proposed a pointless merger in a last gasp for relevance. Once blocked by regulatory worries about competitive impact, executives at both companies had long dreamed of combining the two companies into one, still broadly unremarkable company.
The deal proposed last month involved DirecTV acquiring Dish for one dollar, in addition to $9.75 billion in Dish’s debt. The deal was poised to combine Dish’s 8.1 million (and shrinking) subscriber base with DirecTV’s 11 million (and shrinking) subscriber base in the hopes of creating something semi-interesting.
But, alas, it was never meant to be. DirecTV late last week announced it would be terminating the deal after Dish bondholders refused to accept what they insisted was a loss on the value of the debt:
“Dish bondholders quickly objected to terms requiring them to take a loss on the value of their debt. DirecTV had said Dish notes would be exchanged with “a reduced principal amount of DirecTV debt which will have terms and collateral that mirror DirecTV’s existing secured debt.” The principal amount would have been reduced by at least $1.568 billion.”
Now both companies can slowly die a natural death as nature intended, never even getting to the most exciting part of pointless U.S. consolidation: the bit where companies lie and promise untold new synergies and job creation before laying off thousands of employees, raising consumer prices to recoup debt, and ultimately fielding an even worse product than either company was capable of individually.
Dish is still hoping to pivot into a streaming video and wireless phone company, but neither effort has proven to be all that fruitful, and bankruptcy remains a very real possibility without a fair amount of luck.
