Mike Peterson
AT&T has reached a deal with TPG Capital that will see struggling satellite TV provider DirecTV become its own standalone company.
Under the terms of the arrangement, the deal will create a new company called DirecTV with an implied enterprise value of $16.25 billion. TPG Capital will take a 30% stake in the business, while AT&T will own the remaining 70%.
The deal has been in the works for months as AT&T has been looking for ways to offset the impact of DirecTV's subscriber losses on its results, Variety reports.
"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," said AT&T CEO John Stankey.
Although the agreement covers DirecTV, AT&T TV, and AT&T U-verse MVPD, it doesn't include AT&T's Latin American video operations, U-verse network assets, AT&T's Sky Mexico investment, or regional sports networks.
AT&T has also committed to absorbing $2.5 billion in net losses from the NFL Sunday Ticket package. The carrier will get $7.6 billion in cash from the new entity.
In the fourth quarter of 2020, DirecTV recorded a net loss of 617,000 subscribers. The company has seen a steady decline in subscribers for two years, though AT&T says the situation has improved in the past five quarters.
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12 Comments
This should increase DirecTV's chance of survival. AT&T added no value.
Directv loss viewers because of what AT&T did, they increase the price multiply times and the user interface got worse in the last few years I’m at the point I’m going to drop it since it’s not worth it anymore.
Forcing AT&T ads to show whenever my shows are paused is a frustrating change to the UI that has directly let to me reducing my channel package and switching to streaming on Appletv instead for everything except live sports. It's gross and invasive and unacceptable. Only themselves to blame for the subscriber losses.
Big company buys smaller company in a different but somewhat related field. Claims the cost of the merger or acquisition is worth it due to synergies, growth in customer base, etc. a few years later, big company sells or spins off smaller company after absorbing losses and all sorts of expenses and costs.
I used to like our DirecTV service until they were bought by AT&T. Customer service took a nose dive. We ended up having to cancel service because a tree next to our house was blocking the signal. The customer support people refused to cancel even though their own tech came to our house and stated, “we can no longer provide you with a signal”. I called at least 8 times and they just refused to acknowledge it. Kept saying try for another month. One rep even asked if the tree in question could be cut down or had leaves that would fall off in winter and then the signal would be able to reach the dish. It was like the reps were beaten or fined for canceling service. Eventually they relented but I never did receive the full amount they said the would credit us.