Photographer: Patrick T. Fallon / Bloomberg
Photographer: Patrick T. Fallon / Bloomberg
AT&T Inc. is in exclusive talks to sell a significant stake in DirecTV to private equity firm TPG, the final phase of a month-long push to get rid of at least some of its struggling pay-TV business, a person familiar with the case said.
A possible deal is weeks away, and the talks could still fall apart, the person said, who asked not to be identified because the deliberations are private. The agreement being discussed is highly structured and, according to the person, would contain preferred stock.
It’s not clear what valuation would be given to DirecTV, but previous discussions focused on about $ 15 billion – a fraction of the $ 48.5 billion that AT&T agreed in 2014. The price tag including debt was $ 67.1 billion at the time. Since then, the company has bled customers hard, hit by the cutting of the cord that rocked the pay TV industry.
Representatives for AT&T and TPG declined to comment.
Chief Executive Officer John Stankey has tried to clean AT & T’s home, sell underperforming assets, and use the proceeds to pay off the mountain of debt. If AT&T can unload a major stake in the satellite business, it could allow the telecom giant to pull DirecTV off its books, while still retaining access to some of its cash flow. Activist investor in 2019 Elliott Management urged AT&T to investigate a divestment of DirecTV.
Read more: AT & T’s second breakup
A blank check company backed by former Citigroup Inc. rainmaker Michael Klein previously expressed interest in a deal, Bloomberg reported last year, but those talks stalled. Apollo Global Management Inc. has also discussed a transaction.
DirecTV was open to a merger with rival Dish Network Corp., people familiar with the case said in 2019. But such a deal would raise questions of antitrust. A proposed combination of the two satellite services was shot down by the Federal Communications Commission and the Ministry of Justice in 2002.
As part of its belt tightening efforts, AT&T agreed last month to sell its anime video unit Crunchyroll to Funimation Global Group of Sony Corp. for $ 1.18 billion.
Reuters previously reported on AT & T’s exclusive talks with TPG.
(Updates with responses from companies in the fourth paragraph.)