DirecTV says it is walking away from its planned acquisition of EchoStar's video distribution service, DISH DBS, after Dish bondholders rejected a debt exchange offer from the satellite TV provider.
"A successful exchange was a condition for acquiring the DISH video business," a DirecTV spokesperson said in a statement to FOX Business on Wednesday. "Given the outcome of the EchoStar exchange, DIRECTV will have no choice but to terminate the acquisition of DISH by midnight on November 22."
DirecTV announced in September it would pay $1 for DISH DBS, which means it would own DISH TV and Sling TV, and agreed to assume $9.75 billion of Dish's debt in the deal.
However, a group of DISH bondholders on Monday rejected the proposed debt-exchange offer from DirecTV that was contingent upon them accepting a "haircut" of $1.5 billion.
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DISH did not immediately respond to FOX Business' request for comment on the situation.
The proposed merger was seen as a strategic consolidation in a shrinking pay-TV market as both DirecTV and DISH face intensifying competition from streaming services.
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Streaming services have gained dominance in recent years over satellite TV due to their on-demand accessibility with internet connectivity. 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.
In announcing the proposed merger, DirecTV and EchoStar said that the deal would benefit consumers "by creating a more robust competitive force in a video industry dominated by streaming services owned by large tech companies and programmers."
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The deal would also 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.
FOX Business' Daniella Genovese and Reuters contributed to this report.
