AT&T announced earlier this year that it would transform its video properties DirecTV, AT&T TV and U-verse into a new company that it would co-manage with private equity firm TPG Capital. That transaction is finally complete and the services will now operate as one company under the name DirecTV.
As outlined earlier this year, when the company initially announced plans to offload 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 it pay its money huge debts, which the company expects to stop the bleeding by the end of 2023.
Some of that debt is due from AT&T’s acquisition of the original DirecTV in 2015, when AT&T paid $48.5 billion ($67 billion for debt) to acquire the company. To say that business decision came to nothing is putting it mildly, as DirecTV bleeding customers for years prior to the TPG deal.
When the TPG deal was announced in February, AT&T chief John Stankey said the company planned to focus specifically on “connectivity and content,” including 5G wireless and fiber, as well as the HBO Max service. More recently, however, AT&T’s revised strategy focuses on focusing on its core businesses and, as Stankey recently put it, “unleash the media resources.”
The deal with TPG does not include any of WarnerMedia’s various assets, including major streaming service HBO Max, as those will instead be transferred to Discovery. (WarnerMedia and Discovery are currently awaiting approval to merge 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 all bundled wireless or broadband services and associated customer discounts.”