DirecTV has issued a warning to Dish TV’s parent company, EchoStar, stating that they will withdraw their offer to purchase Dish TV if a debt-exchange offer is not completed. In the meantime, Charter Communications has announced that it will be acquiring Liberty Broadband in an all-stock deal.
John Malone, a prominent figure in the media and cable TV industry, controls both Charter and Liberty Broadband. Liberty initially invested $2.62 billion in Charter back in 2013, which accounted for about 27% of the company at that time. As part of the acquisition, Charter will also be taking on Liberty’s existing debt of approximately $2.6 billion.
Following these developments, Charter’s stock rose by more than 2% to $401.80, while EchoStar’s stock dropped over 2% to $22.14 after experiencing a nearly 13% decline the day before. The situation became complicated when a group of Dish bondholders, who are owed around $10 billion, rejected a debt-exchange offer on Tuesday, jeopardizing DirecTV’s plans to acquire Dish TV.
It is still possible that EchoStar and the Dish bondholders will resume negotiations to salvage the deal. AT&T’s stock, on the other hand, saw a 0.6% increase to $22.29 on Wednesday. In August, AT&T reached an agreement to sell its 70% stake in DirecTV to TPG for approximately $7.6 billion. The deal included TPG-owned DirecTV acquiring EchoStar’s video distribution business, which encompasses Dish TV and the streaming service Sling TV.
Despite the uncertainty surrounding the DirecTV deal, TPG has committed to providing a $2.45 billion loan to EchoStar. Additionally, EchoStar recently closed a $5.2 billion spectrum-backed debt deal to fund its wireless network expansion.
Looking ahead, AT&T is set to host an investor day on December 3 to provide updates on its financial objectives. Analyst Craig Moffett from MoffettNathanson emphasized that regardless of the outcome of the DirecTV deal, TPG’s financial support to EchoStar remains in place.
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