Reports throughout the year have stated that AT&T is looking to unload DirecTV, the satellite TV service that AT&T purchased in 2016 for $67 billion. The service has been bleeding subscribers even more than most pay TV services, while AT&T has moved on to other priorities, following its purchase of WarnerMedia and its launch of HBO Max.
Now, a new report says that a sale of the struggling unit is coming closer.
CNBC reported Tuesday that AT&T is talking to private equity firms, including Apollo Management, to “sell a significant minority stake in its DirecTV, AT&T Now and U-Verse pay-TV businesses in a complicated transaction that would shift legacy assets off the wireless carrier’s balance sheet.” Under that arrangement, AT&T would retain both majority ownership of DirecTV, and the U-verse infrastructure.
The report cited “people familiar with the matter.”
The deal would entail AT&T selling 30 to 49 percent ownership of DirecTV. Final bids are expected early next month and is likely to value the company at less than $15 billion. It was reported earlier this year that AT&T was in talks with several private equity firms about a possible deal, including Apollo, which was mentioned as a DirecTV suitor as early as last year.
The CNBC report does not mention Dish Network, the other major satellite provider, which has come close to merging with DirecTV on multiple occasions over the years.
The CEO of Dish Network has said repeatedly this year that a merger between the companies is “inevitable.” However, reports in mid-October indicated that antitrust regulators in the Department of Justice have made clear that a merger between the two satellite firms would likely face significant resistance, at least until faster 5G service is available in the nation’s rural areas. AT&T is not thought to have the stomach for such a long approval, following the drawn-out approval of its acquisition of WarnerMedia.
In May, a scenario was floated that would spin both DirecTV and Dish into one entity, with private equity firms investing and AT&T continuing to maintain an ownership stake.
AT&T’s TV businesses lost 590,000 subscribers in the third quarter of 2020, following the loss of 897,000 subscribers in the first quarter of 2020, and 886,000 in the second quarter, and leaving 17.1 million premium TV subscribers for the company.
Earlier this week, the U.S. Supreme Court said it would not hear the case in a lawsuit by a group of restaurants and individuals who believe the NFL and DirecTV have an unfair monopoly with their “Sunday Ticket” package.
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. Image: Reuters.