J.P. Morgan recently helped EchoStar sell its satellite television business, which includes the Dish Network and Sling TV, to DirecTV in a landmark transaction expected to give consumers more choice and better value for video entertainment.
The deal, which is a critical component of multiple layers of financial restructuring and strategic realignment, is set to reshape the landscape of video distribution and wireless services in the United States.
“By any objective measure, this is one of the most complicated, out-of-court, simultaneous M&A and balance-sheet restructuring that’s ever been executed or even proposed,” said Fred Turpin, global head of Media and Communications Investment Banking at J.P. Morgan.
Under the terms of the deal, DirecTV will pay $1 for Dish and assume about $10.5 billion of its debt, contingent on the consent of Dish’s bondholders. The combined businesses will serve almost 20 million customers.
Meanwhile, the new EchoStar business will become a pure-play 5G wireless provider with the size and network capacity to compete with Verizon, AT&T and T-Mobile, said Turpin. “They will have an extraordinarily high-capacity network with a wide swathe of the wireless spectrum to compete to achieve that.”
“By any objective measure, this is one of the most complicated, out-of-court, simultaneous M&A and balance-sheet restructuring that’s ever been executed or even proposed.”
Fred Turpin
Global head of Media and Communications Investment Banking, J.P. Morgan
The genesis of the deal
The announcement of the deal brings to a close decades of discussions about a potential merger.
More than 20 years ago, the parent companies of DirecTV and Dish attempted to combine a $19 billion deal, only to be blocked by regulators.
But the conditions to strike a deal were not really right until this year, when the Dish 5G-network build hit critical milestones following the successful recombination of Dish with EchoStar at the end of last year. Dish had spun off EchoStar and its satellite services and set-top businesses 16 years earlier; the recombination allowed Dish to enhance its spectrum position and bolster its balance sheet to support the continued wireless buildout strategy.
A number of other factors influenced the deal. The success of video streaming services like Netflix, Hulu and Amazon Prime, combined with the near universal availability of fixed and mobile broadband services across the U.S., has put the traditional satellite video business in a challenging position.
Dish and DirecTV have both suffered heavy customer churn for years in favor of alternative video services. As a result, the financial leverage at Dish’s satellite TV subsidiary has increased significantly over time, making a transaction an attractive alternative for creditors, who will receive new bonds in the expanded DirecTV as part of the proposed transaction.
The financial engineering
The deal is not just a simple merger — it is part of a series of intricate maneuvers, including a separate M&A transaction involving private equity and other deals including refinancings and convertible bonds to lighten EchoStar’s debt load and free up cash for investment.
EchoStar Chief Executive Hamid Akhavan told The Wall Street Journal that the negotiations were akin to landing multiple jumbo jets on the same runway. “In one shot, we reset the company on a new path,” he said. “To land all of them on the same day, on the same timeline, was unprecedented.”
The vision
The transaction also addresses the declining prospects of the legacy video business, hit by the rise in streaming. “The combined entity will be better able to work with content providers and offer more tailored, skinnier bundles of content and provide more choices for customers,” Turpin explained.
“The remaining EchoStar business will be better capitalized and able to focus its resources on the continued build out of its innovative ORAN wireless network to deliver high capacity 5G services to consumers and businesses in the future,” he added.
Regulatory hurdles and market dynamics
The merger is expected to close in the fourth quarter of 2025, pending regulatory approval. “Twenty-two years ago, a similar deal was blocked by the U.S. Department of Justice due to concerns about market concentration,” Turpin recalled. “Today, the landscape is different. The businesses are much smaller, and the market is dominated by streaming services.”
The human element
One of the most compelling aspects of this deal is the involvement of Charlie Ergen, the founder of Dish. “For the last 30 years, Charlie Ergen was Dish,” Turpin reflected. “The decision to separate these businesses and move on from Dish demonstrates his conviction and excitement about creating the next generation of wireless services.”
Ergen’s vision is to revolutionize the wireless industry, much like he did when he created the original satellite video business with Dish. “This is his second dream,” Turpin said. “He has invested heavily in spectrum and network infrastructure, and this deal allows him to focus fully on making his next generation wireless network a success.”
Transformational series of transactions
The EchoStar and DirecTV deal is part of a series of transactions that repositions Dish from a legacy video services provider to an emerging wireless service provider on the next-generation 5G network. It involves two M&A transactions, three exchange offers on $17 billion of debt, and three new capital raises totaling $8 billion. “It’s a pretty transformational series of transactions,” Turpin said. “We are very happy to have gotten this to the announcement stage, and we look forward to seeing the positive impact it will have on the industry.”
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