AT&T has finalized a transaction that severs its pay television products from the rest of the phone company’s assets.
The move finalizes a plan announced earlier this year by AT&T and the private equity firm TPG Capital to spin off the DirecTV satellite service, AT&T U-Verse and AT&T TV into a separate company.
The newly-formed company will assume the DirecTV brand name and bring with it more than 15 million customers who continue to pay for the satellite service.
DirecTV will also assume control of video products associated with AT&T U-Verse and the streaming services AT&T TV and AT&T TV Now, which will re-brand under the DirecTV Stream name, AT&T said.
AT&T will own a 70 percent ownership stake in the new company, with TPG Capital assuming control of the rest. As part of the deal, AT&T received more than $7 billion in cash and transferred around $195 million in debt to the new company.
Not included in the transaction are products under the WarnerMedia brand, including HBO Max, which are set to merge with Discovery Networks by next year. For the time being, AT&T says DirecTV’s video products will continue to include free access to HBO Max on some of its video packages as a perk to certain subscribers.
Other products associated with AT&T, including network services offered through the U-Verse brand, are also not associated with the transaction, AT&T said.
AT&T said this move will help it reduce its debt load, the bulk of which was attained when AT&T purchased DirecTV and Time Warner several years ago.