DirecTV terminates Dish deal over failed debt swap
Adds background, details in paragraphs 9-11
By Gnaneshwar Rajan
Nov 21 (Reuters) -U.S. satellite TV provider DirecTV said on Thursday it had terminated its agreement to acquire Echostar's SATS.O satellite television business, which includes rival Dish TV, over a failed debt-exchange offer.
The deal would have created one of the nation's largest pay TV distributors 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.
Reuters reported last week that a group representing about 85% of Dish bondholders had rejected that proposal.
"... 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.
DirecTV said the deal termination would be effective Friday.
Echostar 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.
Axios first reported on the deal termination earlier on Thursday.
Reporting by Gnaneshwar Rajan in Bengaluru; Editing by Sonia Cheema, Rashmi Aich and Abinaya Vijayaraghavan
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