It appears AT&T has found a buyer for its beleaguered DirecTV business.
AT&T announced today that it will establish a new company with private equity firm TPG called New DirecTV that will oversee AT&T’s video business DirecTV, U-verse, and AT&T TV, the latter of which recently absorbed the company’s AT&T TV Now service. The deal, which was reported to possibly be announced this week, is said to value the new company at $16.25 billion. AT&T will own 70% of the business, while TPG will own 30% of New DirecTV.
The deal for $7.8 billion is expected to close in the second half of 2021, and AT&T said it will use that money to help pay down its mountain of debt. It’s unclear whether the deal will have any significant impact on the services as they exist and operate now, but AT&T said the newly formed company “will continue to offer a competitive video service with best-in-class content.”
“This agreement aligns with our investment and operational focus on connectivity and content, and the strategic businesses that are key to growing our customer relationships across 5G wireless, fiber and HBO Max,” AT&T chief John Stankey said in a statement. “And it supports our deliberate capital allocation commitment to invest in growth areas, sustain the dividend at current levels, focus on debt reduction and restructure or monetize non-core assets.”
He added, “As the pay-TV industry continues to evolve, forming a new entity with TPG to operate the U.S. video business separately provides the flexibility and dedicated management focus needed to continue meeting the needs of a high-quality customer base and managing the business for profitability.”
Restructure or monetize non-core assets, you say? I wonder how many more WarnerMedia streaming service fire sales a la Crunchyroll we’re going to be reading about in the future.