Photographer: Patrick T. Fallon / Bloomberg
Photographer: Patrick T. Fallon / Bloomberg
AT&T Inc. holds exclusive talks on the sale of a significant stake in DirecTV to the private equity firm TPG, according to the person familiar with the matter.
A possible agreement is weeks away and the talks could still fall apart, the person said, who asked not to be identified because the deliberations are private. The agreement being discussed is highly structured according to the person and will include preference shares.
It is not clear what valuation would be awarded to DirecTV, but previous discussions have focused around $ 15 billion – a fraction of the $ 48.5 billion AT&T agreed to pay in 2014. The price with debt at that time was $ 67.1 billion. Since then, the business has suffered from bloody customers, who have been hit hard by the cuts that rocked the pay-TV industry.
Representatives of AT&T and TPG declined to comment.
CEO John Stankey tried to clean up the house at AT&T, sell less-performing assets and use the proceeds to pay off his mountain of debt. If AT&T can download a large stake in the satellite business, it could have the telecommunications giant remove DirecTV from its books while retaining access to a portion of its cash flow. In 2019, activist investor Elliott Management has asked AT&T to investigate a sale of DirecTV.
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A carriage company backed by former Citigroup Inc. rainmaker Michael Klein has previously expressed interest in a deal, Bloomberg reported last year, but those talks stalled. Apollo Global Management Inc. also had discussions about a deal.
DirecTV was known for a merger with rival Dish Network Corp., people familiar with the matter said in 2019. But such an agreement would raise antitrust questions. A proposed combination of the two satellite services has been shot down by the Federal Communications Commission and the Ministry of Justice in 2002.
AT&T, as part of its belt tension agreed last month to sell its anime video unit Crunchyroll Sony Corp. ‘s Funimation Global Group for $ 1.18 billion.
Reuters previously reported on AT & T’s exclusive talks with TPG.
(Updates with answers from companies in fourth paragraph.)