US satellite TV provider DirecTV has terminated its agreement to acquire Echostar’s satellite television business, which includes rival Dish TV.
The deal would have created one of the largest pay TV distributors in the United States, with a combined 20 million subscribers.
For the deal to go through, Dish bondholders had to agree to exchange their debt for new debt in the merged entity at a discounted rate, taking a “haircut” of about $1.57 billion on the debt.
As part of the transaction, DirecTV was to pay $1 to buy the pay TV business called Dish DBS, including Dish and Sling TV, with the assumption of about $9.75 billion of Dish’s debt.
“We have terminated the transaction because the proposed exchange terms were necessary to protect DirecTV’s balance sheet and our operational flexibility,” Bill Morrow, CEO of DirecTV, said Thursday.
DirecTV said the deal termination would be effective Friday.
Echostar (SATS) did not immediately respond to a Reuters request for comment on the termination.
The proposed deal, initially announced in September, was seen as a strategic consolidation in a shrinking pay TV market.
The deal was also to 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.
DirecTV and Dish have held on-and-off talks over the years.
