Many consumers may not realize that DIRECTV is now owned by AT&T, and now they may never need to know. AT&T said today that it will sell 30% of DIRECTV and related AT&T linear video businesses to TPG Capital and that the co-owners will operate the businesses as a separate company to be known as DIRECTV.
On a call with investors and media today, AT&T CEO John Stankey sounded a bit forlorn as he noted that this move wasn’t what AT&T expected when it purchased DIRECTV several years ago but that the move is “the best way to move forward in the current market.”
TPG Capital is the “private equity platform of global alternative asset firm TPG,” according to a press release.
The AT&T TPG Deal
Under terms of the AT&T TPG deal, expected to close in 2021, the reincarnated DIRECTV will include the DIRECTV satellite video business as well as AT&T TV and U-verse video but will not include the network infrastructure underlying those offerings, which will be retained by AT&T.
DIRECTV, AT&T TV and U-verse video all offer traditional cable TV-like content, with a lineup of channels that include regularly scheduled programming. While DIRECTV is delivered via satellite, U-verse is delivered over a dedicated path on a fiber or DSL connection, and AT&T TV (which now also includes AT&T TV Now, formerly DIRECTV Now) is delivered over a customer’s broadband internet connection.
Linear video offerings have been losing ground to subscription video on demand (SVOD) offerings such as Netflix, Amazon Prime and Hulu that typically are less costly and, some might argue, more versatile than linear TV offerings. Importantly, AT&T is retaining full ownership of its SVOD offering, launched last year and known as HBO Max.
On today’s call, Stankey said the deal with TPG will enable AT&T to maintain a “sharper focus” on key business segments, including 5G wireless, fiber and HBO Max.
According to a press release about the AT&T TPG deal, TPG “has been engaged in the evolving landscape of content creation, distribution and consumption, giving it a unique window into consumer preferences that will inform efforts to continue to improve New DIRECTV’s video service to better meet customer needs.”
The firm has a history of partnering with corporate owners to invest in and carve out non-core businesses, “providing the capital and operational expertise to uncover new value and execute on long-term grown objectives,” the release said.
AT&T bought the DIRECTV business, in large part, as a means of gaining scale for its video offerings so that it would be in a position to negotiate better deals with what many in the industry view as increasingly greedy content providers. The TPG deal would seem to enable AT&T to retain that bargaining position.
Cash in Hand
Some investors have been saying for some time that AT&T should sell the DIRECTV business, arguing that the company should be investing more in its core communications business. Activist investor Elliott Management, which managed a range of funds that included AT&T stock, was particularly vocal in saying that. And although Elliot subsequently sold off its AT&T holdings, the idea that a DIRECTV sale would be a good idea for AT&T retained traction.
The news of the AT&T TPG deal came just one day after the FCC released information about winning bids in the record-breaking C-band spectrum auction. AT&T was the second largest bidder in the auction and has committed to spending $23.4 billion for its C-band licenses – a telling reminder of where some say AT&T should be investing its money.
While the $7.6 billion in cash that AT&T will get from the TPG deal won’t cover that cost, it could cover a substantial portion of it. The company also recently secured nearly $15 billion in debt, which would appear to be in support of its C-Band ambitions.
Additional information about the AT&T TPG deal, including financial details, can be found in this press release.
One thought on “With TPG Deal, AT&T Moves On From Traditional Video Business”
DIRECTV CEO Bill Morrow
At one time I would have addressed this my comments as
Under the Biden Administration that is no longer acceptable and gender is out and the mindset is anything goes and there are no boundaries.
I received an email from Directv on March 27, 2022 stating
And here’s what’s leaving…
“One America News Network after April 4”
OAN channel will no longer be broadcasted on Directv.
A wealth of entertainment channel will be leaving as well.
“DirecTV says it will sever ties with far-right network One America News”
Bill Morrow, shame shame shame on you. I didn’t get to vote on this radical assumption from the far-left. Perhaps you all could have a comedy channel with all of Biden and Harris blunders. Videos of Creepy Joe mauling young girls well any females, oops there is no male or females anymore. You could have a 24 hours of non stop 7 days a week channel of fun and fantasies at Disney. Sparks will be flying more than ever.
“DirecTV announced Friday evening that it will sever ties with One America News later this year, pulling the conservative news channel from millions of homes and dealing a significant blow to the pro-Trump network.”
The channel, which rose to prominence during the Trump administration and has promoted conspiracy theories about the 2020 presidential election and coronavirus pandemic, will be dropped from DirecTV in early April when its contract expires. OAN’s sister channel, A Wealth of Entertainment, will also be removed from the satellite provider. Both channels are owned by Herring Networks and founded by Robert Herring Sr.
Bill and tag-along voting members, can I assume you all are deaf and very ignorant? I will also assume that you all support everything that Biden and Harris has done to ruin the United States. Election in 2020? Obviously none of you knew the legalities of being a registered voter in cities across the country. Ask the victims of crimes who were owed restitution by convicted offenders that have never been paid but were allowed to vote.
Bob, Steve, Thadd and John, hope you all are enjoying what Biden and Harris and cabinets members are doing to boost the economy, foreign relations, celebrate the biggest welcome home party with millions of illegals at the southern border bringing who knows what with them, drugs, guns, diseases, cartel families, russian spies, china and north korea supporters and then let’s not forget Iranians. The killings of innocent people by his ignorance in Afghanistan, trillions upon trillions of debt, go green even if it means countries and millions of people are killed by a monster man that Joe continues to entice by his mumble, jumble of nonsense.
Directv, you won’t have to worry about news channels that chant let’s go brandon, because the US will be broke and no one will be able to afford the luxury of having satellite tv.
Your best buddies at ATT will be sinking so you may want to invest in some heavy duty life preservers.
Before you sink how about a reality show on Hunter Biden with family and friends.
There are so many positive possibilities.