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AT&T reportedly trying to sell DirecTV after massive customer losses
Technology

AT&T reportedly trying to sell DirecTV after massive customer losses

29/08/2020

An AT&T logo on the side of a building.

AT&T is reportedly trying to sell DirecTV to private-equity investors just five years after buying the satellite provider. The negotiations with potential buyers come after millions of customers ditched DirecTV over the past two years, and could value DirecTV at much less than the $49 billion AT&T paid for it.

“AT&T is seeking private-equity investors to buy the majority of its DirecTV satellite-television business, helping it cope with a major drag on its operations, according to people familiar with the situation,” Bloomberg wrote yesterday. AT&T and its advisers at Goldman Sachs “have been in talks with private-equity suitors about the satellite TV unit,” with potential bidders including Apollo Global Management and Platinum Equity, The Wall Street Journal reported.

AT&T could end up selling DirecTV for far less than it paid five years ago. “Any deal for the satellite TV service would be sizable but likely a far cry from the $49 billion AT&T paid for it in 2015,” the Journal wrote, quoting sources familiar with the talks as saying that “a deal could value the business below $20 billion.”

7 million subscribers lost since mid-2018

A sale is by no means a certainty, and AT&T could retain a minority stake in DirecTV even if a sale occurs, the reports said. “AT&T is looking to sell just over 50 percent of the asset, which would allow the telecom giant to take a fast-shrinking business off its books while still enjoying the benefits of a still-large distribution network,” the Journal wrote. AT&T previously considered a sale of DirecTV last year but decided to keep the satellite business.

AT&T’s 2015 purchase of DirecTV happened under then-CEO Randall Stephenson, who retired this year. The new talks with potential buyers “were spurred by Chief Executive John Stankey,” who replaced Stephenson in July, the Journal wrote, adding that “Mr. Stankey has said the company should sharpen its focus on core connectivity services.”

AT&T has been reporting big customer losses each quarter for the past two years, with AT&T’s rising TV prices helping push users to other TV or online streaming services. After a Q2 2020 loss of 954,000 customers, AT&T was down to 18.41 million customers across DirecTV, U-verse TV, and AT&T-branded online TV services. That’s a loss of more than 7 million customers since mid-2018 when AT&T had 25.45 million subscribers in those categories.

AT&T declined to comment, according to Bloomberg. We contacted AT&T today and will update this article if we get a response.

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