AT&T is taking a look at what to do with its 70% stake in DirecTV as the window for its options narrows.
The telecom giant is weighing the future of its holdings in the satellite TV provider “as it approaches the end of an agreement under which it can legally sell its interest in America’s third-largest pay-TV provider,” Bloomberg reported Thursday.
There are several options on the table, including a dividend recapitalization, adding a new investor, or selling the stake and exiting the venture as soon as August 2024, the report said, citing people familiar with the discussions who asked not to be identified because the discussions aren’t public.
No deal is imminent, the report said, emphasizing that discussions are just getting started. The Dallas-based company could also choose to do nothing and keep the ownership structure the way it is.
DirecTV was spun off into an joint venture 30% owned by private equity firm TPG in August 2021. The deal, which valued the business at about $16 billion, came six years after AT&T bought the service for $49 billion.
The partnership with TPG came with a three-year commitment that gave AT&T the option to sell its stake after July 31, 2024, Bloomberg reported, and also included a clause that allows the company to exploring selling its stake before that time.
At the time, its three services, the standalone DirecTV, AT&T TV and U-Verse TV together had a combined 15.4 million subscribers, having lost about 500,000 in just the quarter prior to the deal. Its total subscriber count is now down to 12.4 million, the report said, citing data from Leichtman Research Group, reflecting a loss of 400,000 the second quarter.
Some of those losses are likely due to carriage disputes with Newsmax, which took the conservative news channel off the service for months. Last year, it booted One America News. The combination led former President Donald Trump to threaten to drop “all association” with AT&T and DirecTV, generating a backlash among his devotees.
DirecTV laid off several hundred staffers at the start of the year, stating that “the entire pay-TV industry is impacted by the secular decline and the increasing rates to secure and distribute programming.”
AT&T declined to comment on the report. DirecTV told Bloomberg it wasn’t aware of “any such exploration.”
