Pointless DirecTV, Dish Merger Already On The Edge Of Collapse

Culminating a deal that’s been rumored about for the better part of the last twenty years, Dish Network and DirecTV recently consummated a new merger in a doomed bid to try and remain solvent and relevant.

The deal involved DirecTV acquiring Dish for one dollar, in addition to $9.75 billion in Dish’s debt. The deal was 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 there’s already trouble in paradise. After grumbling about the original offer by bondholders, DirecTV made a revised offer that valued Dish bonds at a little more than 70 cents on the dollar. Investors didn’t like that either, and now the deal looks like it will be dead by Thanksgiving. If the deal can’t be completed, both Dish and Echostar could face an increasing likelihood of outright collapse:

“The likely collapse of the deal would leave Dish in a difficult financial position. Pay TV has been in a long and accelerating decline, and Dish parent company EchoStar on Tuesday reported earnings that disappointed investors, sending shares plunging nearly 13%.”

DirecTV’s sagging relevance comes after AT&T’s disastrous merger tried to build the company into a modern online video advertising juggernaut, only to fall flat on its face with AT&T running for the exits and taking a huge loss.

Dish is trying to survive by pivoting from satellite TV to wireless and streaming video, but neither venture is going all that well. Despite a media campaign last week intended to portray Dish’s “Boost” 5G network as a serious venture, I still suspect the barely-used network will never materialize into a real competitor (you might recall it was a cornerstone of the Trump plan to justify approval of the harmful Sprint, T-Mobile merger, which immediately put an end to wireless price competition in the U.S.).

With broadband and TV subscriber growth saturated, most of the executives in the telecom and media space are all out of original ideas, so they’re pursuing the last avenue of the desperate: pointless mergers and consolidation that temporarily goose stock values, provide big tax cuts, and create the illusion among executives that something useful is happening.

But in this case, the pointless venture couldn’t even get out of the cradle.