MUMBAI: Pay TV is going through its travails. A second attempt to create one of the largest pay TV operators in the US  fizzled out on Thursday with DirecTV terminating its plan to acquire rival Dish Network. Bondholders rejected the debt swap proposal that Direct TV made as part of the buyout. 

The deal construct required DirecTV to pay a nominal $1 for equity and Dish's bondholders to swap $9.75 billion of existing debt into roughly $8 billion of new bonds, thus asking the latter to take a 20 per cent discount.

The offer was sweetened by reducing the loss to Dish by around $70 million, which was also rejected. DirecTV then gave Dish the ultimatum to accept the deal by 22 November, following which they would walk out of the door. Which it did when Echostar (the owner of Dish) did not come to an agreement. 

DirecTV CEO Bill Morrow said that the decision was taken to terminate the transaction “because the proposed exchange terms were necessary to protect DIRECTV's balance sheet and our operational flexibility. We will advance our mission to aggregate, curate, and distribute content tailored to customers' interests by pursuing innovative products and providing customers with additional choice, flexibility, and control. We are well positioned for the future with a strong balance sheet and support from our long-term partner TPG."

With this failed merger, the two will continue to battle with each for other for subscribers in an already shrinking pay TV market place. Both Dish and DirecTV have lost more than half their subscribers since 2013 when pay TV was at its peak.