Why the DirecTV/Dish Merger Matters — Even if You Don’t Have a Satellite Dish
The DirecTV and Dish satellites are no longer in Low Earth Orbit.
The two sat-TV companies are merging to become America’s biggest MVPD (Multichannel Video Programming Distributor) with roughly 19 million video subscribers between them. For Dish, the move staves off bankruptcy. For DirecTV, it provides the scale needed to combat the Disney villains the next time a carriage deal comes around.
Earlier this month, Disney channels went dark on DirecTV as the two sides could not come to terms on a new carriage deal; the same thing happened to Charter last year. (A year before that Disney took the fight to Dish, a battle that itself was preceded by Disney vs. YouTube TV.)
Something had to change, so on Monday, the biggest will they/won’t they in satellite-television history became a definitive “I do.” Dish parent company EchoStar has sold Dish (and Sling TV) to private-equity firm TPG.
TPG also bought AT&T out of the rest of its DirecTV holdings, or 70 percent of DirecTV; TPG already owned the other 30 percent.
We can shorthand it as: Dish Sells to DirecTV.
Dish needed to do something here — and fast. The number 2 in satellite (most Dish and DirecTV customers still have satellite dishes, though the majority of their new customers opt to go dish-free) had $2 billion in debt coming due on November 24. This deal takes care of that; Dish lives on (sort of) and EchoStar’s lights stay on. EchoStar will use $5.1 billion from the merger to bolster its cellular brand Boost Mobile.
As for DirecTV, it’s the only one that will be strutting around like a billionaire. In one move, pending regulatory approval (the transaction expects to close in Q4 2025), DirecTV will leapfrog league-leaders Charter and Comcast, each of which have about 13 million video subscribers. DirecTV’s 11 million video subs + Dish’s 8 million = Don’t screw with us.
Disney for years had the ability to strong-arm the old school cable and satellite guys. DirecTV can’t afford to lose ESPN and ABC for long, so the best it could do whenever carriage negotiations came up was to lose a few of Disney’s lesser-watched channels and gain subsidized (sometimes free) access to Disney+ for some of its top-tier customers. Charter set the precedent for that sort of streaming deal for its customers, so a smaller company like DirecTV couldn’t ask for much more.
Disney is also in a unique position for carriage deals: Fox has no streaming service, neither Paramount nor Warner Bros. Discovery are in positions of strength to demand more, and Comcast owns NBCUniversal, so it would not be interested in negotiating against itself.
In response, DirecTV and Dish bulked up, finally flipping a rivalry into a marriage. It is not one of convenience, but of necessity. As the third- and fourth-largest cable providers, respectively, DirecTV and Dish got the short end of the stick every 3-5 years when carriage deals came up for renewal. Now DirecTV + Dish combined gives them that much more leverage against Disney.
Problem is, if the new DirecTV is “big,” then Disney remains positively gargantuan. Disney+ alone has about 55 million subscribers in the U.S., telling you all you need to know about where the industry is headed. Even before streaming, Disney was driving the MVPDs absolutely batty: getting access to the ESPN linear channel is way more expensive than any other network, costing cable providers about $10 per customer to carry.
But DirecTV hopes its new scale will tip the scales. The new DirecTV will be “better positioned to… negotiate with programmers for the content that consumers demand,” according to a press release announcing the merger.
Making that announcement though was EchoStar, the company that’s exiting the cable-TV business and won’t have to fight those battles any longer.
The statement went on to add that the deal will deliver “more choices and better value” to consumers. It may: A stronger DirecTV could pass along better carriage deals to the customer, sure. On the other hand, combining Dish and DirecTV creates a virtual monopoly in satellite television, controlling that corner of the market without each other as competition.
