AT&T, according to numerous media reports in recent months, is looking to sell a stake in its DirecTV unit, along with its other pay TV operations. The latest reports have indicated that private equity firms are part of the mix to potentially purchase the stake.
A new report lists a new possible suitor for the DirecTV stake, a SPAC (special-purpose acquisition company) called Churchill Capital Corp. IV. According to Bloomberg News, the SPAC raised $2 billion in the month of July, and is assembling a possible bid for the DirecTV stake.
The Churchill group is backed by Michael Klein, formerly of Citigroup, who has backed several SPACs this year.
The Bloomberg report added that the deal is expected to value DirecTV at around $15 billion, compared with the more than $67.1 billion AT&T paid, including assumption of debt, to buy DirecTV back in 2016.
Apollo Global Management has been mentioned often as a potential DirecTV buyer. AT&T is said to want to sell off a major stake, in order to get DirecTV off its balance sheet and reduce debt, although the company does still wish to own some of the DirecTV infrastructure, and keep some of its cash flow.
Another company that has been mentioned in relation to the change is Dish Network, DirecTV’s longtime rival, Dish Network, with which it has nearly merged on multiple occasions over the years. More recently, indications are that any merger of the two, no matter how structured, would likely draw significant regulatory scrutiny from Washington.
The CEO of Dish Network, Charlie Ergen, has frequently described a combination between the two satellite TV services as “inevitable,” and despite the recent reports, he repeated that assertion on Dish’s quarterly earnings call last week.
“DIRECTV, obviously, I’ve said publicly that I think the combination of those two companies is inevitable. The competition is not for us, it’s not DIRECTV, the competition is the actual programmers themselves that we deal with,” Ergen said on the call, per a Motley Fool transcript.
“They all have their own OTT products that they compete very well with what we do. It is in the consumers’ best interest that there will be scale as alternatives to that. But that’s a regulatory—that’s something where there has to be—I think that DIRECTV is or at least what I’ve read. So don’t take me as gospel on this, but they would like to deconsolidate that business and that they would like to do that before they would take any regulatory risk. Whether that happens or whether—how they do that or whether they do that, of course, remains to be seen.”
Whether the regulatory environment in regard to mergers is headed for a change, with a new administration about to come to power in Washington, is unclear.
Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to 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.