Satellite television provider DirecTV has agreed to buy longtime competitor Dish Network, rescuing the struggling Colorado-based broadcaster that pioneered the industry.

The proposed consolidation, announced early Monday, highlights the challenges facing traditional television. DirecTV agreed to assume Dish’s net debt and pay just $1 for Dish’s satellite TV business and streaming service Sling TV – a stunning admission about the fading prospects of the once-famous satellite TV provider and its Englewood, Colo.-based parent company EchoStar Communications .

The deal is expected to be completed in two separate transactions. Private equity firm TPG plans to acquire AT&T’s majority stake in DirecTV, giving TPG full ownership of the El Segundo-based company.

Separately, DirecTV agreed to assume $9.9 billion of Dish’s debt upon closing of the EchoStar transaction. The proposed acquisition, structured as a debt swap, would allow DirecTV to grow its subscriber base with Dish’s more than 8 million households. DirecTV currently has about 10 million subscribers for its namesake service and U-Verse.

“We believe this is the right proposition for consumers,” DirecTV CEO Bill Morrow said in an interview. “We believe (satellite television) has greater life and greater value than most people realize.”

The deal calls for EchoStar to quickly obtain a $2.5 billion loan so the company can restructure its debt. The cash infusion is intended to help EchoStar and its billionaire CEO Charlie Ergen pay off a looming debt default and continue their efforts to build a wireless service under the Boost Mobile brand.

Ergen, the 71-year-old outsider who co-founded EchoStar in 1980 when he and his wife sold satellite dishes door-to-door, would be getting out of the television business. That would be a significant milestone, as Ergen brought Dish to life in 1996, two years after DirecTV launched its national service.

The Dish and DirecTV consolidation is expected to face regulatory scrutiny.

In 2002, the Federal Communications Commission thwarted the companies’ first attack on a union. The FCC ruled that a combination of DirecTV, then owned by Hughes Electronics Corp., and EchoStar’s Dish Network would stifle competition by shrinking the field of satellite TV providers from two companies to just one. At the time, satellite television was a popular option for residents of rural communities where cable was not available.

Since then, the business has changed dramatically. Tech giants Netflix, Amazon Prime Video and Google’s YouTube TV have gobbled up a large chunk of the television distribution business, and both Dish and DirecTV have lost customers. The two companies have lost more than 60% of their customer base since 2016.

“There is more competition than ever before. It’s not just cable TV and satellite TV anymore,” Morrow said. “We are the ones in the minority; We are the ones dropping like flies.”

The regulatory review is expected to take about a year, the companies said.

“It’s hard to imagine regulators would block a deal,” telecom industry analyst Craig Moffett wrote in a recent email. “Better to have one than not to have one.”

Ergen’s company suffers from a high debt burden. Negotiations with lenders to restructure its payments collapsed this summer, EchoStar said in a recent filing.

The company was forced to make a $1.98 billion payment in mid-November, leading some analysts to predict that bankruptcy was imminent.

EchoStar had just $521 million on hand at the end of June. In the second quarter, the company suffered sharp declines in revenue and traditional TV customers. However, the Sling TV business showed improvement.

EchoStar shares have gained ground in recent weeks on rumors of a deal with DirecTV. Shares closed Friday at $28.04, up 9%.

“This agreement is in the best interests of EchoStar’s customers, shareholders, bondholders, employees and partners,” EchoStar CEO Hamid Akhavan said in a statement announcing the deal. “We expect Dish and DirecTV bondholders to benefit from two companies with stronger financial profiles and more sustainable capital structures.”

TPG, which currently owns 30% of DirecTV, will assume the bulk of the $2.5 billion loan to EchoStar. TPG’s Angelo Gordon division will handle financing.

AT&T is expected to exit its stake in DirecTV in the second half of next year, ending its disastrous foray into the entertainment business.

AT&T bought DirecTV in 2015 for about $67 billion, including debt, and then led the unwinding of the business.

In 2021, AT&T spun off DirecTV and U-Verse into a separate company and hired TPG as managing partner.

The Dallas phone giant also separately sold Warner Bros. Discovery in 2022 for $43 billion – half the amount AT&T paid in 2018 to become a player in Hollywood. Since then, the company has focused on its mobile phone business.

The companies Dish Network and Sling TV have debts of around $11.5 billion.

“We don’t believe the value is there to support this (heavy debt),” Morrow said. “There is virtually no equity in the company.”

While DirecTV has agreed to assume nearly $10 billion of Dish debt, that component is conditional on bondholders accepting less than Dish’s current liabilities. The goal, Morrow said, is to reduce Dish’s debt by $1.6 billion, making it more manageable.

The deal is also subject to regulatory approval.

“It’s hard to argue that a merger shouldn’t happen; Clearly it should be,” Moffett said. “Consolidation in a time of secular decline is always to be expected.”