Satellite merger: DirecTV buys rival Dish and Sling

FOX, ESPN, Warner launch sports streaming service

MarketWatch tech reporter Jon Swartz joins LiveNOW's Austin Westfall to break down the news that FOX, ESPN and Warner Bros. are teaming up to launch a joint sports streaming platform this fall.

DALLAS - DirecTV announced Monday that they are buying EchoStar’s video distribution business, including Dish TV and Sling TV, as the company seeks to better compete against streaming services that have become dominant.

On Sept. 30, DirecTV said they would acquire the services through a debt exchange transaction that includes a payment of $1, plus the assumption of approximately $9.8 billion in debt.

Shortly before DirecTV made its announcement, AT&T said it was selling its remaining stake in DirecTV to private equity firm TPG in a deal valued at about $7.6 billion.

"DIRECTV was founded 30 years ago to give consumers greater choices than incumbent cable companies for video content, and the Company’s acquisition of DISH TV and Sling TV positions it to again provide more choices and better value in an industry currently dominated by large streaming platforms," said David Trujillo and John Flynn, Partners at TPG.

A DirecTV satellite dish sits on a roof on May 19, 2014 in New York City. (Credit: Andrew Burton/Getty Images)

The prospect of a DirecTV-Dish combo has been previously rumored, with headlines about reported talks popping up over the years. The two almost merged more than two decades ago, but the Federal Communications Commission blocked the deal, citing antitrust concerns.

DirecTV said Monday that the transaction will help it bring smaller content packages to consumer at lower prices and essentially provide a one-stop shopping experience for entertainment programming.

It's hoping this will appeal to those who have left satellite video services for streaming. The company said that combined, DirecTV and Dish have collectively lost 63% of their satellite customers since 2016.

As subscription prices for traditional satellite TV increased and the desire for on-demand viewing surged, more households began to cut the cord from traditional satellite providers.

"DirecTV operates in a highly competitive video distribution industry," DirecTV CEO Bill Morrow said in a statement. "With greater scale, we expect a combined DirecTV and Dish will be better able to work with programmers to realize our vision for the future of tv, which is to aggregate, curate, and distribute content tailored to customers’ interests, and to be better positioned to realize operating efficiencies while creating value for customers through additional investment."

Business strategist Marva Bailer called it a "strategic" merger. By combining their buying power, they'd be able to negotiate better deals, potentially offering competitive pricing, according to Bailer.

By offering more comprehensive content options, blending traditional TV with streaming services, and providing greater flexibility in bundling, she agreed that it would make them highly competitive against services like Netflix, Hulu and Disney+.