AT&T stands to lose big on DirecTV sale: report

DirecTV clouds
As DirecTV continues to lose subscribers at an accelerated pace, AT&T has placed its focus on AT&T TV and HBO Max as its core video products. (Acabashi/Wikimedia Commons)

AT&T is reportedly still seeking a sale of DirecTV, its beleaguered satellite TV service, and the price may end up even lower than previously thought.

According to the New York Post, AT&T has received opening bids for DirecTV from several potential suitors and the valuation is less than the reported $20 billion for which the company had hoped. Current bids for the satellite provider are implying a valuation around $15.75 billion, less than a third of what AT&T originally paid for DirecTV.

In 2015, AT&T paid $48.5 billion for DirecTV and took on the company’s approximately $18 billion in net debt.

The primary bidders for DirecTV are private equity firms. Dish Network – despite claims from Chairman Charlie Ergen that a Dish-DirecTV merger is “inevitable” – is not bidding on DirecTV, according to the report.

RELATED: If AT&T sells DirecTV, it will not involve Dish Network: report

In August, the Wall Street Journal reported that AT&T had renewed its efforts to offload DirecTV, which lost another 846,000 subscribers in the second quarter, according to Leichtman Research Group. AT&T and its advisers have been discussing a possible deal with private equity firms including Apollo Global Management and Platinum Equity.

AT&T is reportedly looking to sell a little more than 50% of the business so it can remove it from its financial reports but still hang onto its distribution network.

In the meantime, AT&T has made changes to DirecTV pricing by removing its least expensive video tier for new subscribers. TV Answer Man spotted the change, which took away DirecTV’s $59.99/month Select plan as an option for incoming customers. AT&T confirmed the changes.

“We’ve stopped offering the Select package for new DirecTV customers in an effort to align package offerings across DirecTV and AT&T TV,” said AT&T Spokesperson Jim Kimberly.

As DirecTV continues to lose subscribers at an accelerated pace, AT&T has placed its focus on AT&T TV and HBO Max as its core video products. During AT&T’s second-quarter earnings call, CEO John Stankey described the software-based video products as the “optimal way to meet customer needs” for both live, linear and on-demand content.

“Do I think satellite is necessary to respond in that area? You can go back and look at comments I made very early on, post-transaction of DirecTV, that we didn’t necessarily make that move because we love satellite as a technology to deliver premium entertainment-based video content. We like the customer base and it was an opportunity to move that customer base into the right technology platforms moving forward and that’s clearly where we’re investing,” Stankey said.

Suggested Articles

As for content, audiences have primarily tuned into entertainment and news programming.

Disney may be sandbagging Hulu’s international expansion plans to avoid having to pay more to Comcast, which still owns one-third of the service.

Telestream has acquired EcoDigital to hopefully streamline content management and transcoding for the companies’ customers.