NEW: DirectTV's Desperate Attempt to Stay Alive Comes Down to Acquiring... Dish Network?

Well, after years of rumors, false starts, and a ton of “Will they?” and “Won’t they?” questions that make Paramounts latest fiasco look like a cake walk - it appears the satellite TV industry might finally witness its most significant shakeup in years. DirecTV, the satellite TV giant you probably forgot existed (Satellite TV is so last decade), is in advanced talks to swallow up its longtime rival Dish Network. 

(Source: Wall Street Journal) 

Dish Network? I haven’t heard that name in years…

In short, according to people in the know, this $9 billion deal could be signed, sealed, and delivered as soon as tomorrow (Monday) - signaling another step towards the end of the satellite TV era we all grew up with. RIP. 

(Source: Giphy) 

How so? Well first, keep in mind, this merger isn’t happening because DirecTV and Dish are thriving.  No sir, it’s actually quite the opposite. You see, these two companies are like that old couple you see in movies who’ve been married for 50 years but can’t stand each other — yet now they’re finally realizing that the cold, blistering nights aren’t quite as bad when they’re sleeping in the same bed. 

And with cord-cutting slicing through their subscriber bases like a hot knife through butter, DirecTV and Dish are barely hanging on. 

(Source: Yahoo Finance) 

For example, Dish, the brainchild of billionaire Charlie Ergen, is especially feeling the heat right now. The company is staring down the barrel of a $1.98 billion debt maturity in November, and with just $521 million in cash on hand and negative cash flows forecasted for the rest of 2024. Translation: Dish, in all its glory, is screaming “Help me”. 

(Source: Giphy) 

And DirecTV? Well, let’s just say it isn’t exactly in peak form either. It serves about 11 million subscribers—down from 15.4 million when AT&T spun it out in 2021. Ooof. For more context, Dish ended its last quarter with 6.1 million satellite subscribers and another 2 million Sling TV customers. So yeah, neither of these companies are operating from a position of strength.

(Source: SDX Central) 

For this reason, DirecTV is expected to scoop up Dish’s satellite TV business, its poor digital streaming service Sling, and its associated liabilities. The catch?—Dish’s wireless spectrum assets (which it’s been hoarding like Gollum with the One Ring) are “not” part of the deal. Now I’m not super sure on how that will work, but apparently that's all staying in Dish’s file cabinet, presumably for its own 5G ambitions or other plans that may or may not involve world domination.

(Source: Giphy) 

Now with that said, the deal is expected to be an all-cash transaction, which feels oddly appropriate for two companies that are so deep in debt that they’re practically swimming in it. For EchoStar (Dish’s parent company), this is a Hail Mary pass to keep the lights on long enough to pay down some of that looming debt. For this reason, the stock ended up skyrocketing +8.85% on the news on Friday. 

(Source: Sportico) 

If this is giving you some serious déjà vu, it’s because we’ve been here before. DirecTV and Dish tried to hook up back in 2002, but regulators — still buzzkillers even back then — shut it down. The big concern was that rural customers wouldn’t have enough options. But fast forward to 2024, and the world is a completely different place. Broadband is everywhere, and streaming services have become the new norm. 

But that doesn’t mean this deal will sail through without a hitch. Regulators still might have some questions, especially around rural customers. The Department of Justice (DOJ) expressed concerns as recently as 2020 when it warned that 5G service wasn’t quite there yet to make a merger like this a no-brainer for rural areas. And let’s not forget that the DOJ is “super” cautious about setting a precedent that more mergers in struggling industries could follow.

(Source: New York Post Circa 2020) 

Now for the 17 people still using satellite TV in rural America, this merger could be a blessing or a curse. On one hand, the combined DirecTV-Dish Frankenstein monster could use its scale to negotiate better content deals and maybe — maybe — offer more competitive pricing.

On the other hand, fewer choices in the market could mean less competition, which usually translates to higher prices. So, you know, a typical “wait and see” situation. Translation: the days of DirecTV and Dish being household names are numbered.

(Source: Giphy) 

Especially considering that the satellite TV industry isn’t just competing with streaming services—they’re also battling new entrants in the space-based internet game. For instance, Elon Musk’s Starlink and Amazon’s Project Kuiper are gunning to deliver high-speed internet to remote areas, and if they succeed, that could be the final nail in the coffin for satellite TV. Why dish out (pun intended) for satellite TV when you could stream everything over high-speed internet from space? 

(Source: Jerusalem Post) 

But, but, but… As DirecTV and Dish Network enter the final stages of negotiations, the satellite TV industry is holding its breath. A successful merger would mark the culmination of decades of competition between these two giants. 

But even if the deal goes through, it’s more of a temporary Band-Aid on a business model that’s in rapid decline. Or, as Moffett so aptly put it, “At the rate at which these businesses unravel, you’re talking about maybe buying yourself one or two extra years.” Not exactly a glowing endorsement, eh?

(Source: Giphy) 

In the end, is it safe to say this may be the end of the satellite TV era? Absolutely. But will this merger provide a lifeline to help DirecTV and Dish limp along for a few more years? Probably. Either way, it’s the last hurrah for an industry that’s become the victim of new technology and consumer habits that have arisen from the “streaming wars.” And just like Intel in the tech space, these companies are holding on for dear life.

In the meantime, keep an eye on this developing story, and as always - stay safe and stay frosty, friends! Until next time… 

PS: We failed. Yep, you read that right. We didn’t hit our usual triple-digit target. Instead, our Wednesday pick only shot up 60%. Is that a letdown? Maybe for perfectionists, but to be honest, we’ll still take it. Want in on our next potential 100%+ winning trade alert? Click here to become a premium member.

Stocks.News holds positions in Amazon and Intel as mentioned in the article.