AT&T reportedly wants to divest more than just DirecTV.
According to a CNBC, the telecom is also looking at possibly also selling minority stakes in two of its other pay TV platforms, virtual MVPD AT&T TV Now, and its legacy U-verse TV service.
The telecom’s AT&T TV service, launched earlier this year, isn’t mentioned in the report.
The questionably credible New York Post reported last month that AT&T was talking Apollo Management and other private equity firms about a “fire sale” deal that would unload the DirecTV satellite TV business for around $15.75 billion. (AT&T paid nearly $67 billion for it back in 2015, factoring in debt.)
On Tuesday, CNBC reported that AT&T is talking to the same private equity companies about taking stakes ranging from 30% - 49% in AT&T TV Now and U-verse TV. For the latter, AT&T would keep the wireline infrastructure and technology that backs the U-verse brand, as well as the U-verse broadband component. Notably, AT&T stopped selling U-verse TV to new customers earlier this year.
The rollup would effectively take the declining portion of AT&T’s pay TV businesses off its balance sheets.
Final bids are reportedly due in December.
AT&T reported the loss of 590,000 customers in the third quarter across its “premium” pay TV brands, DirecTV, U-verse TV and AT&T TV. The telecom said the latter service, an IP-based linear service that launched earlier this year, is fueling its wireline fiber growth. So, ostensibly, it’s growing. But AT&T hasn’t said by how much.
AT&T TV Now saw declining blood loss of 37,000 customers in Q3. But AT&T has long since stopped aggressive promotions that drove the live streaming service to a peak of around 2 million customers in the summer of 2018. AT&T TV Now had only 683,000 remaining customers as of the end of September.
As analysts explain it, AT&T has a narrow path to walk with its declining pay TV assets. It needs to find a way to cut costs, without further accelerating cord cutting and the cash-generating potential of the platforms. AT&T also has to maintain shareholder dividends while paying down enough debt to meet the demands of credit rating agencies. All the while, the telecom has to find money to invest in growth business, such as HBO Max and the fiber deployment which AT&T TV is part of.
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