AT&T Reportedly Looking To Sell Stake In Pay TV Operation


By Stuart Thomson

US telco AT&T is looking to sell a minority stake in its pay TV operations, spanning DirecTV, AT&T Now and U-Verse, according to a report by CNBC.

According to the report, Apollo Management and other private-equity outfits are set to submit final bids for a stake in the pay TV unit in December, with a deal likely to value pay TV service DirecTV at under US$15 billion – massively less than the US$67 valuation it held when AT&T acquired it with debt five years ago.

According to CNBC, AT&T would retain majority ownership of the pay TV business and control the physical infrastructure that supports IPTV service U-verse. However, the buyer would control pay TV distribution and – crucially – consolidate the pay TV operation in its accounts.

According to the news outlet, the telco would not sell its DirecTV Latin America business as part of the deal.

AT&T has been looking to reduce its debt levels following its acquisition of Time Warner and has pivoted its video strategy to focus on streaming offering HBO Max. Its legacy pay TV offerings have continued to shed subscribers in line with the national trend towards cost-cutting.

There has been speculation for some time about a possible sale of the pay TV business. Last year, activist investor Elliott Management invested US$3.2 billion in the company and called for a radical overhaul of the US telco in the interests of “value creation”, including a potential sale of DirecTV.

Elliott was highly critical of AT&T’s acquisition strategy, including its US$67 billion acquisition of DirecTV and its US$109 billion acquisition of Time Warner, and said that the DirecTV acquisition had produced “damaging results”.

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