AT&T has long been tied to reports about a DirecTV sale but now the company may be looking to loop U-verse and AT&T TV Now into a potential deal.
According to CNBC’s Alex Sherman, AT&T is speaking with private equity firms including Apollo Management – which has been circling DirecTV – about a deal to sell a minority stake in the three businesses. The report suggests that AT&T would keep its U-verse infrastructure including plants and fiber but the buyer would take over the pay TV distribution operations. The deal could potentially be for 30% to 49% of the combined pay TV distribution businesses.
AT&T has reportedly said that final bids are due in early December. Any deal will not include DirecTV’s Latin American business, according to the report.
CNBC said AT&T may not get more than $15 billion (including debt) for DirecTV. That lines up with an earlier report from the New York Post, which said 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.
In 2020, AT&T has refocused its video strategy on HBO Max and AT&T TV and left DirecTV, U-verse and AT&T TV Now largely out of the picture. During the most recent quarter, AT&T lost 37,000 AT&T TV Now subscribers and 590,000 premium TV subscribers. The company gave credit to AT&T TV for helping to offset continued rapid subscriber declines at its struggling satellite service.
AT&T ended the third quarter with 17.1 million premium TV subscribers (down 16.3% year over year) and 683,000 AT&T TV Now subscribers (down 40.3% year over year).