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In a surprising turn of events, DirecTV has decided not to proceed with its planned acquisition of Dish TV, owned by Charlie Ergen's EchoStar. The deal, which aimed to create a major pay-TV distributor with a combined subscriber base of 20 million, would have seen DirecTV take on Dish's extensive pay-TV business, including Dish and Sling, and assume approximately $9.75 billion of Dish's debt. Under the terms of the agreement, DirecTV was set to pay EchoStar $1 for Dish’s pay TV division, contingent on Dish bondholders accepting new debt terms at a discounted rate—ultimately requiring them to take a haircut of around $1.57 billion.

The transaction, initially announced in September, encountered a significant hurdle when Dish bondholders rejected the proposed debt exchange terms. This resistance directly contributed to the deal's termination as it was essential to maintain DirecTV's financial stability and operational flexibility, according to DirecTV CEO Bill Morrow. He emphasized that the decision was made to protect the company's balance sheet. "We have terminated the transaction because the proposed exchange terms were necessary to protect DirecTV's balance sheet and our operational flexibility," Morrow stated on Thursday.

Despite the setback, Morrow assured that DirecTV remains focused on its mission to offer content that caters to customers' preferences through innovative products, offering greater choice, flexibility, and control to its users. He confirmed that the termination of the deal would be effective on Friday. EchoStar has yet to comment on the cancellation.

This merger attempt was the second between DirecTV and Dish to falter. The first attempt in 2002, valued at $26 billion, was blocked by regulators over competition concerns during the George W. Bush administration. The recent proposed merger was seen as a strategic initiative to consolidate the shrinking pay-TV market, which has been significantly affected by the rise of streaming services. Additionally, it was perceived as a crucial lifeline for EchoStar, co-founded by Ergen, which is currently burdened with over $20 billion in debt. The failure of the deal highlights the continuing challenges the companies face in navigating a rapidly evolving media landscape.