31 AUG 2020

AT&T CONSIDERS DIRECTV UNIT SALE

AT&T paid USD 49 billion for the Directv business, but Wall Street analysts estimate a potential sale price of USD 20 billion. The company has lost about 6 million traditional pay-TV customers overall in just the last two years.

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AT&T Inc. is exploring the option to sell its DirecTV unit, a business that has lost billions of dollars in value since the wireless carrier acquired it in 2015. However, it is unclear who the potential buyer is. AT&T and its advisers, led by Goldman Sachs, are apparently in early exploratory talks with private equity investors like Apollo Global Management and Platinum Equity. As a result, the company stock was up 2% to USD 30.62 each in after-hours trading 28th August.

AT&T, which also owns the U-Verse brand, has lost about 6 million traditional pay-TV customers overall in just the last two years. The Covid-19 pandemic has caused cord-cutting to accelerate as consumers look to save money by switching to streaming-video services such as Netflix and AT&T’s own HBO Max. AT&T paid USD 49 billion, but according to the analyst of Bloomberg Intelligence, John Butler, estimates a potential sale price of USD 20 billion.

AT&T said that DirecTV had generated USD 22 billion in cash flow since 2015. Now that Randall Stephenson, the CEO who bought DirecTV, has retired, and AT&T has a new linear TV product called AT&T TV, there's no reason to cling onto the weared-out brand. DirecTV also won’t rebound after the pandemic, and given the uncertainty around sports, there’s now a question mark on the value of its NFL Sunday Ticket package. Another possible buyer could be a satellite TV competitor, Dish Network, which has 9 million satellite TV subscribers. Dish Chairman Charlie Ergen expressed his approval despite being doubtful that regulators will help seal the deal.

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