AT&T is selling its remaining majority stake in DirecTV as the carrier company is now planning to refocus its core business on wireless and fiber connectivity. The deal is valued at $7.6 billion and will mark AT&T's official exit from the entertainment industry.
DirecTV was first acquired by AT&T back in 2015 for around $48.5 billion when AT&T thought it would integrate the satellite TV service with its telecommunications business. However the coming years, the company faced a lot of challenges in the TV market as consumers began shifting to streaming platforms.
Then in 2021, AT&T entered into a joint venture with a private equity firm TPG, who acquired a 30% stake in DirecTV for around $1.8 billion, with a valuation of $16 billion at that time, which came with a lock-in period of 3 years during which AT&T couldn't sell its stake. Now that the lock-in period is over, AT&T has sold the remaining 70% stake to TPG.
As more customers preferred paying for streaming services rather than pay TV, DirecTV experienced a significant drop in subscribers, from 15.4 million in 2014 to 11.3 million in 2023. Over the years, DirecTV also faced issues related to carriage agreements with certain channels, resulting in temporary blackouts. One such incident was when channels like Newsmax and One America News were dropped from DirecTV, resulting in backlash.
The deal is likely to benefit AT&T as the carrier plans to streamline its business and focus on providing better telecommunication services, including 5G and fiber services. AT&T says that this transaction will also improve its balance sheet, as the deal includes an initial payment of $2 billion that's scheduled for 2025, along with $1.7 billion in pre-tax distributions for the latter half of 2024 and $5.4 billion in 2025. There's also a final payment of $500 million which is anticipated in 2029.
The deal is expected to close in the second half of 2025, which is currently pending regulatory approvals.
via Bloomberg
8 Comments - Add comment