AT&T is getting out of the TV business
Telecommunications giant AT&T (T) is selling its remaining stake in DirecTV, as it looks to shift its focus back to wireless 5G and fiber connectivity offerings.
AT&T said Monday that it’s offloading its entire 70% stake in the company to private equity firm TPG (TPG), and expects a total of $7.6 billion in cash payments from DirecTV and TPG over the next six years.
In the second quarter, AT&T added 419,000 monthly paying wireless phone subscribers, and expects revenue growth in the 3% range for the rest of 2024.
For its part, DirecTV announced that it will be acquiring EchoStar’s satellite television business, including Dish TV. Under the deal, DirecTV will pay EchoStar (SATS) $1 and will assume $9.75 billion of Dish’s debt.
The acquisition is part of a a push to combat the streaming industry’s dominance over the television market.
“DirecTV operates in a highly competitive video distribution industry,” DirecTV chief executive Bill Morrow said in a statement. “With greater scale, we expect a combined DirecTV and Dish will be better able to work with programmers to realize our vision for the future of TV, which is to aggregate, curate, and distribute content tailored to customers’ interests, and to be better positioned to realize operating efficiencies while creating value for customers through additional investment.”
DirecTV said the agreement will allow it to offer smaller packages at lower price points and expand its programming options. It will also allow the company to remain competitive in the TV industry, at a time when U.S. consumers are getting rid of their traditional cable and satellite offerings in favor of major streaming platforms.
Together, DirecTV and Dish have collectively lost 63% of their satellite customers since 2016, the company said. DirectTV estimates, however, that the combined company has the potential to reduce costs by $1 billion per year, three years after the deal closes.
Both transactions is expected to close toward the end of 2025.
The deal is also expected to reduce EchoStar’s debts by approximately $11.7 billion and reduce its refinancing needs by approximately $6.7 billion through 2026.
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