AT&T sells minority stake in its DirecTV business to private equity group
The two parties announced today they have signed an agreement under which they will establish a new company named DIRECTV (New DIRECTV) that will own and operate AT&T's US video business unit consisting of the DirecTV, AT&T TV, and U-verse video services.
The new entity will be valued at $16.25 billion and it will be governed by a board with two representatives from each of AT&T and TPG, as well as a fifth seat for the CEO, which at closing will be AT&T's current CEO of AT&T's US video unit, Bill Morrow.
After the transaction closes in the second half of 2021, AT&T will receive from New DIRECTV $7.8 billion ($7.6 billion in cash and the assumption from AT&T of $200 million of existing DIRECTV debt). As we informed you in our previous report, AT&T plans to use the money to pay up some of its debt.
As far as the services offered by New DIRECTV, the company will have a commercial agreement with AT&T to continue to offer bundled pay-TV service for AT&T's wireless and internet customers. Also, AT&T and New DIRECTV will have commercial agreements in place that will give New DIRECTV video subscribers continued access to HBO Max.
AT&T confirmed that later this year, after the transaction is completed, existing AT&T video subscribers will become New DIRECTV customers and they will be able to keep their video service and any bundled wireless or broadband services, as well as HBO Max, plus any associated discounts they may have scored.
The same goes for the content deals AT&T has in place, including NFL SUNDAY TICKET on DIRECTV, which will become part of New DIRECTV.