AT&T Exits Entertainment Sector with $7.6 Billion Sale of DirecTV to TPG

September 30, 2024 08:53 AM PDT | By Team Kalkine Media

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AT&T Exits Entertainment Sector with $7.6 Billion Sale of DirecTV to TPG — Image source: Shutterstock

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Highlights

Divestiture Announcement: AT&T is selling its remaining 70% stake in DirecTV to TPG for approximately $7.6 billion, concluding its involvement in the entertainment sector.
Transaction Structure: The sale will occur in stages, with AT&T receiving $1.7 billion in 2024, $5.4 billion in 2025, and the remaining balance by 2029.
Strategic Merger Plans: DirecTV plans to acquire Dish TV and Sling TV from EchoStar, valued at $1, alongside assuming about $9.8 billion in debt, in a move aimed at enhancing competitive positioning against streaming services.

Detailed Overview

AT&T Inc {NYSE:T} has announced the sale of its remaining 70% stake in DirecTV (NASDAQ) to private equity firm TPG for approximately $7.6 billion. This transaction signifies the end of AT&T's direct involvement in the entertainment industry. The sale will be executed in phases: AT&T will receive $1.7 billion in 2024, followed by $5.4 billion in 2025, with the remaining balance expected by 2029.

AT&T initially acquired DirecTV in 2015 for $48.5 billion. However, significant customer losses over the years led to the decision to sell a 30% stake to TPG in 2021, reflecting the challenges faced by traditional pay-TV operators amid the rise of streaming platforms.

In a related development, DirecTV has announced its intention to acquire Dish TV and Sling TV from EchoStar in a debt exchange transaction valued at $1, while also assuming approximately $9.8 billion in debt. This long-rumored merger is perceived as a strategic effort to bolster DirecTV's competitive edge against major streaming services.

Bill Morrow, CEO of DirecTV, indicated that the merger would create a more robust entity capable of offering competitive content packages and improving operational efficiencies. The deal is projected to close in the fourth quarter of 2025, contingent upon regulatory approvals and agreements from bondholders to write off around $1.6 billion in debt. This consolidation reflects the ongoing evolution of the entertainment landscape, as companies adapt to changing consumer preferences and market dynamics.

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