Photographer: Patrick T. Fallon / Bloomberg
Photographer: Patrick T. Fallon / Bloomberg
AT&T Inc. is in exclusive negotiations to sell a significant stake in DirecTV to private equity firm TPG, the last stage of a month-long effort to get rid of at least part of the difficult pay TV business, according to a person familiar with the matter.
A possible agreement is weeks away and negotiations can still fail, said the person, who asked not to be named because the deliberations are private. The deal under discussion is highly structured and would include preferred shares, according to the person.
It is unclear what rating would be assigned to DirecTV, but previous discussions focused on about $ 15 billion – a fraction of the $ 48.5 billion that AT&T agreed to pay for it in 2014. The price including the debt was US $ 67.1 billion. Since then, the business has suffered a hemorrhage from customers, hit hard by the wire cut that shook the pay TV industry.
AT&T and TPG officials declined to comment.
CEO John Stankey has been trying to clean up AT&T’s home by selling underperforming assets and using the proceeds to pay off his mountain of debt. If AT&T can offload a large stake in the satellite business, it could allow the telecommunications giant to remove DirecTV from its books, while maintaining access to part of its cash flow. In 2019, activist investor Elliott Management urged AT&T to explore the sale of DirecTV.
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A blank check company backed by former Citigroup Inc. rainmaker Michael Klein has previously expressed interest in a deal, Bloomberg reported last year, but these negotiations have stalled. Apollo Global Management Inc. also held discussions about a transaction.
DirecTV was open to a merger with rival Dish Network Corp., people familiar with the matter said in 2019. But such a deal would raise antitrust issues. A proposed combination of the two satellite services was overturned by the Federal Communications Commission and the Department of Justice in 2002.
As part of its belt-tightening efforts, AT&T agreed last month to sell its Crunchyroll anime video unit to Sony Corp’s Funimation Global Group for $ 1.18 billion.
Reuters previously reported on AT&T’s exclusive conversations with TPG.
(Updates with company responses in the fourth paragraph.)