The long saga of AT&T’s attempts to sell off a stake in DirecTV appears to be nearing an end.
According to CNBC, AT&T is nearing a deal to sell a large stake in DirecTV and U-Verse to private equity giant TPG. The deal would give the AT&T video business a $15 billion valuation, which is what AT&T had reportedly been seeking throughout the talks.
The deal is expected to be formally announced this week. The CNBC report did not state how large the stake is.
That’s considerably less than the 48.5 billion (or $67 billion with debt included) that AT&T paid to purchase DirecTV back in 2016. But in the years since, the satellite business has declined significantly, while AT&T has pivoted to concentrate on other businesses, following its purchase of WarnerMedia and its launch of the HBO Max streaming service. The deal will give AT&T additional cash, in order to pay down debt, the CNBC piece said.
AT&T, in its most recent earnings release, said that it lost 617,000 video subscribers, after losing 590,000 subscribers in the third quarter. The company had dropped even more subs- lost 897,000 subscribers in the first quarter of 2020, and 886,000 in the second quarter—in the first part of the year, in the first months of the pandemic. That added up to around three million lost net subscribers.
The company had also booked a $15.5 billion charge on the DirecTV business unit in January, which the Wall Street Journal described as "reflecting the damage cord-cutting has taken on its DirecTV satellite unit even as the company’s HBO Max streaming service’s growth ramped up.”
The talks to sell either all or some of DirecTV had been going on since at least the summer of 2020. Apollo Global Management had been frequently mentioned as a potential bidder, but no deal ever came together, and reports in December stated that AT&T might be backing off of its sale plans since none of the bidders had yet met the price AT&T wanted.
However, that December report by the New York Post had said that AT&T had invited TPG to look at its books, in the hope that they would submit a bid of their own.
While some scenarios floated in the media in the early days of the sale process indicated that a deal would involve the combination of DirecTV and its longtime rival Dish Network, the new deal does not appear to involve Dish in any way. Charlie Ergen, Dish’s former CEO and current chairman, has called a combination of the companies “inevitable” on multiple occasions.
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.