DirecTV Dish acquisition goes horribly wrong

DirecTV announced the development in a short press release. Sifting through the legalese, it essentially said DirecTV had notified Dish owner EchoStar of its decision to terminate the ‘equity purchase agreement’, following Dish debt-holders’ failure to agree to the terms. When the acquisition was announced at the end of September, it required Dish debt-holders to agree to get back $1.5 billion less than they’re owed. For some reason that didn’t appeal to them.

"While we believed a combination of DirecTV and Dish would have benefitted all stakeholders, we have terminated the transaction because the proposed Exchange Terms were necessary to protect DirecTV’s balance sheet and our operational flexibility," said Bill Morrow, CEO of DirecTV.

That seems like an ironically indirect way of saying “we didn’t think Dish was even worth the full amount of its debt.” And maybe it isn’t, but the holders of that debt apparently beg to differ. They announced as much earlier this month, making this move a formality.

Consequently the future of Dish, and indeed every other part of the EchoStar group, is very uncertain. The day after the aforementioned debt-holders made their feelings clear, EchoStar announced ‘the successful completion of various transformative strategic transactions positioning its business for the further enhancement of its nationwide Open RAN 5G Network.’

"We are optimistic for the bright future ahead following the completion of these transactions that position our business for success,” said Hamid Akhavan, EchoStar CEO. “The significant additional capital raised by our business, together with our successful efforts to improve our debt maturity profile, will allow us to continue to invest in our nationwide Open RAN 5G network, and secure profitable customer acquisition and retention.”

That was ahead of a crucial debt deadline and seems to have bought the company some breathing room. But it’s far from clear that the rolling cashflow crisis afflicting EchoStar has any long term resolution, especially since other companies that have hitched their wagon to Open RAN also seem to be having a tough time. Watch this space.