AT&T is reportedly trying to sell DirecTV to private equity investors just five years after purchasing the satellite provider. Negotiations with potential buyers come after millions of customers have left DirecTV over the past two years and DirecTV could be valued at far less than the $ 49 billion AT&T paid for it.
"AT&T is seeking private equity investors to buy the bulk of its DirecTV satellite television business and is helping the company cope with a significant strain on its operations, according to those familiar with the situation," Bloomberg wrote yesterday. AT&T and its consultants at Goldman Sachs have "held discussions with private equity applicants about the satellite TV unit," with potential bidders such as Apollo Global Management and Platinum Equity, the Wall Street Journal reported.
AT&T could sell DirecTV for far less than it did five years ago. "Any deal for the satellite television service would be sizeable, but likely a far cry from the $ 49 billion AT&T paid for it in 2015," the Journal wrote, citing sources familiar with the talks as saying: " A deal could value the deal under $ 20. " Billion."
7 million subscribers have lost since mid-2018
A sale is by no means a certainty, and AT&T could retain a minority stake in DirecTV even if a sale takes place, the reports say. "AT&T intends to sell just over 50 percent of its assets, which would allow the telecommunications giant to take a rapidly shrinking business off its books while taking advantage of a still large distribution network," the journal wrote. AT&T had already considered selling DirecTV last year, but decided to keep the satellite business.
AT&T acquired DirecTV in 2015 under then-CEO Randall Stephenson, who retired that year. The new talks with prospective buyers "were driven by Chief Executive John Stankey," who replaced Stephenson in July, the Journal wrote, adding that "Mr. Stankey said the company should sharpen its focus on core connectivity services."
AT&T has been reporting large quarterly customer losses for the past two years. AT & T's rising TV prices are helping to move users to other TV or online streaming services. After losing 954,000 customers in the second quarter of 2020, AT&T had dropped to 18.41 million customers on DirecTV, U-Verse TV and AT&T online TV services. That's a loss of more than 7 million customers since mid-2018, when AT&T had 25.45 million subscribers in these categories.
AT&T declined to comment, according to Bloomberg. We contacted AT&T today and will update this article when we receive a response.