Following years of steep subscriber losses, and a long auction process, AT&T has finally completed the spinoff of its DirecTV unit into a separate entity.
The deal, which was agreed to back in February, will spin DirecTV into a unit that is owned in part by AT&T and in part by TPG. The new company will also include AT&T’s other video units, including AT&T TV and U-verse.
“AT&T contributed its U.S. video business unit to the new entity in exchange for preferred units as well as a 70% interest in the common units of DIRECTV,” the companies said in their official announcement. “TPG contributed approximately $1.8 billion in cash to DIRECTV in exchange for preferred units and a 30% interest in common units of the new company. The DIRECTV board will include Bill Morrow, CEO of DIRECTV, and the following additional voting board members: Steve McGaw and Thaddeus Arroyo, appointed by AT&T; and David Trujillo and John Flynn, appointed by TPG.”
In a separate announcement, the new DirecTV stated that it is “all-in on video.” It confirmed the reports from last month that its streaming product will now be called DirecTV Stream.
AT&T had said in its recently released outlook that the DirecTV deal was expected to close in “the next few weeks.” The FCC had already agreed to shift the company’s satellite licenses to “New DirecTV,” as the new entity has been informally called.
“This is a watershed moment for DIRECTV as we return to a singular focus on providing a stellar video experience,” Bill Morrow, CEO, DIRECTV, said in the announcement. “Building on our recent momentum, we are well-positioned to bring unparalleled choice and value to all of our customers under one iconic brand, whether they beam it or stream it.”
DirecTV will “prominently feature its bold new look across its video services, and new and existing customers will experience several touchpoints with it,” according to the announcement.
DirecTV had 15.4 million premium video subscribers as of the end of the second quarter of 2021, the company said in the announcement. AT&T had lost 620,000 premium video subscribers in the first quarter of 2021.
Back in July, AT&T and Dish Network agreed to a deal in which AT&T will become the wireless network for Dish, for the cost of $5 billion over ten years. The deal did not involve the rumored tie-up of Dish’s satellite business with that of DirecTV, although some have speculated that AT&T and Dish going into business will make such a tie-up more likely in the future.
Stephen Silver, a technology writer for the National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.