DirecTV and Dish Shake Up Pay TV Landscape With Massive Merger

Good morning. It's September 30th, and today, we’ll look at a major move in the streaming industry as DirecTV and Dish are finally merging after decades of discussion, plus AT&T is selling its stake in DirecTV for $7.6B.

Previous Close 📈

Stocks ended last week on a strong note, with the Dow rising 0.3% to reach an all-time high and the S&P 500 and Nasdaq gaining 0.6% and 1%, respectively. September has been positive overall, with the Dow up 1.8%, the S&P 500 rising 1.6%, and the Nasdaq advancing 2.3%.

Futures

U.S. stock futures are little changed as the final session of September and the third quarter begins. Dow futures are flat, S&P 500 futures are steady, and Nasdaq 100 futures have slipped 0.14%. Investors are buoyed by signs of stabilizing prices and a healthy labor market, anticipating continued strength in risk assets.

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What to Watch

Carnival (NYSE: CCL) will report its quarterly earnings before the market opens. The Chicago Business Barometer (PMI) for September will be released at 9:45 a.m. Eastern.

After the market closes, ReposiTrak (NASDAQ: TRAK), Precision Optics (NASDAQ: POCI), and The Glimpse (NASDAQ: VRAR) will announce their earnings.

Entertainment

DirecTV and Dish Seal Merger to Form Major Pay TV Giant

DirecTV will merge with Dish TV, marking the culmination of decades of on-and-off discussions between the satellite TV providers.

The agreement will create one of the largest pay TV operators in the U.S., with a combined subscriber base of 20 million, even as both companies face shrinking market shares due to competition from streaming giants like Netflix and Prime Video.

DirecTV CEO Bill Morrow expressed confidence that the merger will enable the company to provide tailored programming packages and a more streamlined viewing experience, allowing customers to manage both traditional TV and streaming services in one place.

The deal is also expected to help combat the widespread fragmentation of subscription services.

As part of the transaction, DirecTV will pay $1 to acquire Dish DBS, which includes both Dish TV and Sling TV, while assuming $9.75 billion of Dish's debt.

EchoStar, co-founded by Charlie Ergen, will receive $2.5 billion in financing from TPG to assist with paying off upcoming bond maturities. EchoStar plans to reduce its overall debt by $11.7 billion as a result of the deal.

This merger comes as a much-needed exit for AT&T, which has been trying to divest from DirecTV after declining returns on investment. AT&T is selling its entire 70% stake in DirecTV to private equity firm TPG for $7.6 billion.

Regulatory approval for the merger is expected to be challenging but may be more feasible than in previous decades due to shifts in the media landscape. The transaction is expected to close by Q4 2025.

Education

KinderCare Aims for $3.1B Valuation in Highly Anticipated US IPO

KinderCare Learning Companies, supported by Swiss private equity firm Partners Group, is moving closer to its long-awaited U.S. IPO with a target valuation of up to $3.09 billion.

The early childhood education provider, founded 55 years ago, had previously explored going public in 2021.

In this latest push, KinderCare is aiming to raise up to $648 million by offering 24 million shares priced between $23 and $27 each. The company plans to list on the New York Stock Exchange under the symbol "KLC."

Goldman Sachs, Morgan Stanley, Barclays, and J.P. Morgan are among the more than 10 Wall Street banks underwriting the offering.

The listing represents a significant step for the company as it seeks to solidify its position in the early education sector.

Healthcare

CVS Faces Potential Activist Push From Major Shareholder Glenview Capital

Glenview Capital, a major shareholder in CVS Health, is expected to meet with the company's leadership on Monday, signaling a possible activist push to address the company's ongoing struggles, according to insiders.

The hedge fund has built a substantial position in CVS, joining a growing list of investors seeking change at the retail pharmacy and health insurance giant. CVS shares have dropped 22% year-to-date, with investor confidence waning after three consecutive quarters of lowered full-year guidance.

CVS has been grappling with rising medical costs in its Aetna insurance unit, which has weighed on earnings, particularly as seniors resume medical procedures delayed during the pandemic.

Additionally, CVS has been facing margin pressures in its retail pharmacy business, where reimbursement rates for prescriptions have declined, and inflation has squeezed profitability.

Earlier this year, Sachem Head Capital Management also disclosed a position in CVS, marking another instance of activist involvement. CVS recently announced a $2 billion cost-cutting plan and a major leadership shakeup in its insurance segment as it looks to stabilize its business.

CVS has already closed 851 of 900 planned stores as part of a broader strategy to streamline operations and adapt to changing consumer behavior.

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TTEC Holdings [TTEC] - Last Close: $4.05

TTEC Holdings stock is surging by nearly 34% in premarket trading.

The firm’s CEO, Kenneth Tuchman, who is also the founder and chairman of the company, proposed to take the company private at a price of $6.85 per share. This represents a premium of up to 69% over recent trading prices.

Tuchman, who owns about 58% of TTEC's common stock, is driving this move with the intention of accelerating strategic investments and long-term success outside the pressures of public markets.

While the proposal is still in its early stages and will require financing, definitive agreements, and approval from a majority of minority shareholders, it could represent a significant transformation for the customer experience solutions provider..

Nio [NIO] - Last Close: $6.52

Nio is experiencing a surge, up nearly 14% in premarket trading.

The stock got a double boost as it announced a major RMB3.3 billion cash investment from strategic investors into its subsidiary, NIO China, while the latest stimulus measures by Beijing are also causing a rally in Chinese stocks.

In addition to this, Nio itself is committing RMB10 billion to the subsidiary.

The investment is expected to be completed by the end of 2024, pending customary regulatory approvals, paving the way for future growth and continued success in both domestic and international markets.

Prime Medicine [PRME] - Last Close: $3.46

Prime Medicine is up 12% in premarket trading following the announcement of a strategic research collaboration and license agreement with Bristol Myers Squibb.

The deal focuses on developing and commercializing next-generation ex vivo T-cell therapies using Prime Medicine's innovative Prime Editing technology.

As part of the agreement, Prime Medicine will receive $110 million upfront, with the potential for more than $3.5 billion in milestone payments—$1.4 billion in development milestones and over $2.1 billion in commercialization milestones.

Bristol Myers Squibb will be responsible for the development, manufacturing, and commercialization of these new cell therapies.

Technology

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Everything Else

• European auto stocks lost $10 billion as Stellantis, Volkswagen, and Aston Martin issue grim profit warnings.

• September PMI signaled ongoing contraction in China's manufacturing sector, prompting renewed stimulus measures from policymakers.

• Frasers Group made an £83-million offer for Mulberry as concerns have grown over the handbag brand's future.

• Vodafone and Three UK outlined commitments aimed at securing CMA approval for their merger amid competition worries.

• OK Lim agreed to pay $3.59 billion to liquidators and HSBC, marking the end of civil disputes in Singapore.

• Cambricon Technologies is surging 20% as Beijing urged companies to replace NVIDIA chips with local alternatives.

• A lawsuit against Abbott and Reckitt highlights the risks of formula for premature babies as the trial begins in Missouri.

That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.

Best Regards,

— Adam Garcia
Elite Trade Club

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