Does AT&T still own DirecTV?
It can be asked whether AT&T has ownership of DirecTV.
After paying $49 billion for DirecTV in 2015, AT&T became the biggest pay-TV business in America from that acquisition. Comprising DirecTV's 20 million video customers linked with AT&T TV, Internet & mobility, the merger was completed in July 2015. But AT&T opted to sell DirecTV in 2020, in a transaction including the private equity company TPG.
That reminds us of events occurring five years between the time AT&T bought DirecTV and sold the company. But, with the TPG agreement, who owns the DirecTV now? Here is a historical overview along with most recent updates: Here is a historical overview along with most recent updates:
Why AT&T Acquired DirecTV
The main idea of the acquisition of DirecTV by AT&T in 2015 was the fact that it would allow the latter to have a vast pool of video subscribers who could be offered bundled services such as wireless phone services and broadband connections. Based on these strategies, AT&T had internet service to market highly bundled video, mobile, and broadband services.
Further, the company mentioned several special factors which include the highly-rated NFL Sunday Ticket package of professional football games on Direct TV. For AT&T, DirecTV was considered as a high-end pay TV which was strategic for video operations.
Why The Deal Struggled
However, over the next few years, pay TV has changed at a much faster pace than estimated. On-demand streaming platforms like Netflix also contributed to the shift from traditional cable TV networks. This is true, especially in the case of AT&T where there was a huge dropout of customers to other digital competitors.
Also, antitrust regulators imposed certain riders in the DirecTV deal, which limited the pricing discounts AT&T could provide to its consumers. Therefore, AT&T did not realize the synergy and integration advantage it anticipated could come from the ownership of DirecTV.
Some analysts expressed worries even in 2018 about whether AT&T's expansion goals could be met with the current content production approach. Activistic investor Elliott Management said in December 2019 that it now owned a sizable share in AT&T and then described possible remedies including divestment of DirecTV.
It is noteworthy that the take-private agreement TPG negotiated for DirecTV was a far cry from what the acquisition sector had seen in past years.
Though AT&T would retain 70% ownership, in February 2021 AT&T also agreed to sell up to 30% of DirecTV to TPG Capital, a private equity company. The deal meant that, for almost 70% less than the $49 billion for&T had bought for it in 2015, the DirecTV company was assessed to be worth $16.25 billion.
This is a result of the transaction where DirecTV would be a new stand-alone company, operating under a new brand called DirecTV Stream. This left TPG to purchase 30% of the new DirecTV Stream entity from AT&T at a cash consideration of $1.8 billion.
AT&T said that the pay-TV market had remained more resilient than it had expected when it signaled further deterioration of the business as consumers moved to next-generation streaming platforms. Therefore, to facilitate this growth, and to allow DirecTV to be most effective on its own and not under AT&T, AT&T decided that DirecTV would be most effective as a standalone entity.
THIS MEANS FOR DIREC TV SUBSCRIBERS
Existing DirecTV video subscribers which were over 13 million in August 2021 when the transaction was closed were assured by AT&T that their services would not be affected. However, AT&T owns 70% of the new DirecTV Stream to holds significant authority and control over it. This strategic move shows that the company will go ahead and fund the innovation of DirecTV, new features, and high-quality content.
Looking into the future as the DirecTV Stream: AT&T’s vision is to transform the company into an online streaming paid subscription Television network. This is about unifying live sports, news, and the tens of thousands of shows and movies instantly in one interface, and on devices.
If DirecTV Stream can systematically transition from satellite TV into a multi-platform streaming service that competes with Hulu+Live, YouTubeTV, or SlingTV, this could be exactly the game changer that AT&T needs for its video distribution portion. However, only time will tell if this new path now opened between AT&T and private equity will help DirecTV to arrest its declining subscriber numbers.
Therefore, to sum it up – yes, AT&T still owns a 70% stake in DirecTV after having sold only a 30% equity stake to TPG in 2021 and rebranding DirecTV as a standalone streaming company called DirecTV Stream moving forward.
Upgrade to faster, more reliable AT&T Fiber Internet today! Call us at +1 844-905-5002 and get connected with speeds that keep you ahead.
