Telecom giant AT&T is considering different options to divest its 70 percent stake in DirecTV, according to a report.
On Wednesday, financial news outlet Bloomberg said AT&T was weighing various plans to offload its interest in the satellite TV provider, which also operates a co-named streaming service and the legacy IP-based pay television platform U-Verse.
Among the options being considered is a full divestiture of AT&T’s 70 percent stake, which could allow it to exit the pay TV business by next August. Bloomberg said AT&T is also exploring ways to add on a new investor to take over more ownership of DirecTV.
DirecTV was spun off from AT&T two years ago, and is operated as a joint venture with investment firm TPG Capital, which owns a 30 percent stake in the business.
When accounting for its streaming and U-Verse products, DirecTV is still one of the largest pay television operators in the country by customers served. But that customer base has eroded over the last few years as subscribers flee higher bills that are triggered by rising programming costs from broadcasters and the owners of cable networks.
Accordingly, the amount of money DirecTV has brought to AT&T has been reduced over the same amount of time. Bloomberg said AT&T earned $1.9 billion from DirecTV during the first six months of this year, down from $2.7 billion over the same time period last year.
Unnamed sources cited by Bloomberg said discussions of a divestiture are still in early stages at AT&T, and the company may ultimately abandon plans to sell some or all of the business.
Less clear is whether AT&T is also considering a push to merge DirecTV with rival satellite broadcaster Dish Network — something that has been tried several times over the past few decades, but failed to materialize amid regulator scrutiny.
Executives at AT&T and Dish Network have not shied away from hinting that a merger might still be on the table, though they are treating the idea with some cautious optimism.
At an investor conference earlier this year, AT&T’s Chief Financial Officer Pascal Desroches said any plans to merge with Dish or another provider would have to be carefully weighed by it and TPG Capital.
“Would we look at other opportunities? We always do, that’s our job,” Deroches said. “But the bar would be pretty high in order to do something to try to accelerate more value creation.”
The regulatory environment might also be better for a proposed combination of DirecTV and Dish: In years past, government officials were largely opposed to the idea, feeling two competing direct broadcast satellite platforms would offer better competition to traditional cable television services — made all the more better that Americans could subscribe to Dish or DirecTV wherever they lived in the country.
Now, the entire traditional pay television ecosystem is competing against upstart streaming services, with fresh products like YouTube TV, Philo and Fubo driving customers away from cable and satellite with different channel options at various price points and the ability to watch content on screens beyond the television.