Enlarge /. A DirecTV satellite dish seen outside a bar in Portland, Oregon in October 2019.
AT&T is reportedly closing a deal to sell a stake in DirecTV to TPG, a private equity firm.
Unfortunately for customers hoping AT&T will give up control of DirecTV, a Reuters report said Friday that the upcoming deal would give TPG a "minority stake" in AT & T's satellite TV subsidiary. On the other hand, a private equity firm looking to get value out of a declining business wouldn't necessarily be better than AT&T for DirecTV customers.
It is also possible that AT&T could cede operational control of DirecTV even if it remains the majority owner. CNBC reported in November on a proposed deal in which "AT&T would retain a majority economic interest in the businesses [DirecTV and U-Vers TV] and retain ownership of U-Vers infrastructure, including facilities and fiber," while the buyer of a DirecTV stake "would control the pay-TV distribution activities and consolidate the business on its books."
The recent talks between AT&T and TPG are "exclusive", with other bidders being out of the running for the time being, Reuters wrote last week, citing anonymous sources. "The advanced talks with TPG are the culmination of an auction that AT&T carried out for DirecTV for several months," the report said.
DirecTV lost most of its value owned by AT&T.
AT&T bought DirecTV for $ 49 billion in 2015 and has reportedly been unable to receive offers that rate the TV provider at half that amount. "The exact price TPG is willing to pay could not be determined, but sources suggest that the deal could value DirecTV at more than $ 15 billion," wrote Reuters, suggesting that the month-long auction would not or only match the price little increased.
Bloomberg also reported that AT&T and TPG are in exclusive talks over DirecTV. "A possible deal is still weeks away and the talks could still fall apart … The agreement under discussion is heavily structured and would include preferred shares," wrote Bloomberg, citing an anonymous source.
TPG has $ 85 billion under management, including investments in dozens of technology companies.
AT&T lost 8 million customers
AT&T has lost nearly 8 million customers to its premium TV services since early 2017, which include DirecTV satellite, U-verse landline video, and the newer AT&T TV online service. The total number of customers in this category fell from over 25 million in early 2017 to 17.1 million at the end of September 2020.
While the industry-wide shift from cable and satellite television to online streaming has hurt business, AT&T itself accelerated DirecTV's customer losses by repeatedly raising prices and removing promotional offers. AT&T raised TV prices again last week. AT&T is expected to report profits – including the latest TV subscriber numbers – on Wednesday.