AT&T to Spin Off DirecTV, Pay-TV Units with TPG

DirecTV satellite dish
(Image credit: Future)

AT&T said it reach an agreement with investment company TPG to spin off its pay-TV assets -- DirecTV, AT&T TV and Uverse -- into a new company.

AT&T bought DirecTV in 2015 for $49 billion. The new deal reportedly values the pay-TV assets at $15 billion. AT&T also bought WarnerMedia, but has been trying to pivot its entertainment business from pay-TV to streaming with HBO Max.

AT&T will own 70% of the new company and TPG will own 30%. As part of the transaction it will receive $7.8 billion in cash and the assumption of debt from the new company. TPG will contribute $1.8 billion in cash to the new company.

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The CEO of the new company will be Bill Morrow, who is now CEO of AT&T’s U.S. video unit.

DirecTV’s agreement for NFL Sunday Ticket will be moving to the new company.

“This agreement aligns with our investment and operational focus on connectivity and content, and the strategic businesses that are key to growing our customer relationships across 5G wireless, fiber and HBO Max. And it supports our deliberate capital allocation commitment to invest in growth areas, sustain the dividend at current levels, focus on debt reduction and restructure or monetize non-core assets,” said AT&T CEO John Stankey.

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“As the pay-TV industry continues to evolve, forming a new entity with TPG to operate the U.S. video business separately provides the flexibility and dedicated management focus needed to continue meeting the needs of a high-quality customer base and managing the business for profitability. TPG is the right partner for this transaction and creating a new entity is the right way to structure and manage the video business for optimum value creation,” Stankey said.

“Video remains a core service for tens of millions of households. Since its launch in 1994, DireTV has continually evolved its product, content and service to provide customers an industry-leading video offering. As video consumption habits evolve, the new DirecTV will continue investing in its offering to provide value to its customers, including through next-generation streaming pay-TV services,” said David Trujillo, partner at TPG. “TPG looks forward to partnering with AT&T and new DirecTV leadership to bring the right focus, attention and execution in support of new DirecTV position as a competitive video provider for the benefit of its customers and employees.”

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Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.