AT&T announced earlier this year that it would spin its video properties DirecTV, AT&T TV, and U-verse into a new company it would co-manage with private equity firm TPG Capital. That transaction is finally complete, and the services will now operate as a single company under the name DirecTV.
As outlined earlier this year when the company initially announced plans to off-load its struggling DirecTV business, AT&T will retain a 70 percent stake in the company, while TPG will take a 30 percent stake. The telecom giant said the deal for which it received $7.1 billion in cash would help pay off its massive debt, with the company projecting it can put a stop to the bleeding by the end of 2023.
Part of that debt is owed because of AT&T’s acquisition of the original DirecTV in 2015, at which time AT&T paid $48.5 billion ($67 billion accounting for debt) to acquire the business. To say that that business decision has failed to deliver is putting it mildly, as DirecTV bled customers for years prior to the TPG deal.
At the time the TPG deal was announced in February, AT&T boss John Stankey said that the company planned to focus specifically on “connectivity and content,” including 5G wireless and fiber as well as its service HBO Max. More recently, however, AT&T’s revised strategy is to focus on its core business and as Stankey put it recently, “unleash the media assets.”
The deal with TPG does not include any of WarnerMedia’s various assets, including its marquee streaming service HBO Max, because those are being offloaded to Discovery instead. (WarnerMedia and Discovery are currently awaiting approval for the merger of their two companies.)
But the deal will include existing DirecTV content deals for things like NFL Sunday Ticket. AT&T added that DirecTV would “continue to offer HBO Max to subscribers along with any bundled wireless or broadband services and associated customer discounts.”
