This week, the New York Post said DirecTV’s parent company AT&T was moving forward with a process that could lead to the sale of the satellite service for significantly less than what AT&T paid five years ago.
Citing unnamed sources, the Post said opening bids for DirecTV put a valuation on the service at around $15.75 billion. AT&T paid $49 billion for DirecTV in 2015.
Most of those vying for DirecTV are said to be private equity firms. Some of those firms could band together to make a single offer for DirecTV, or the auction could end with AT&T keeping a small portion of the service, the Wall Street Journal said.
Dish Network — which has tried to merge with DirecTV in the past — is not one of the companies participating in the auction, sources told the Post. Earlier this year, Dish Network’s founder and chairman Charlie Ergen said he felt a Dish-DirecTV merger was “inevitable,” but noted regulatory hurdles would make that effort difficult.
Like other pay TV companies, DirecTV and AT&T’s other traditional service AT&T U-Verse have been stung by a shift in consumer behavior that involves ditching expensive linear television bundles for cheaper, a-la-carte, on-demand streaming services. Some online-only pay TV services like YouTube TV, Sling TV and Philo have captured some customers who have absconded from cable and satellite in recent years, but on-demand streaming services like Netflix, Hulu, Amazon Prime Video, Disney Plus and Peacock have seen more adoption in a shorter amount of time.
AT&T is betting big on its own on-demand streaming service, HBO Max, which marries HBO’s original programming with movies and TV shows from WarnerMedia’s content library. But the service has not shown the same momentum as other on-demand streaming services in part to existing deals between AT&T and cable companies concerning the traditional HBO channel.
AT&T is hoping to reverse that course with a lighter version of HBO Max that will be offered at a cheaper price and include commercials but lack current episodes of HBO shows.