Three years after spinning off its pay television service DirecTV into a separate company, AT&T says it is finally ready to exit that part of the industry entirely.
On Monday, the telecom said it has reached an agreement with private equity firm TPG, Inc. to sell its 70 percent stake in the satellite and streaming pay TV company. TPG has owned 30 percent of DirecTV since 2021, when AT&T separated itself on paper from DirecTV.
The valuation of the deal was not disclosed, but AT&T said it expects to report an additional $7.6 billion in cash payments once the sale of its stake in DirecTV is finished.
The sale is expected to close early next year, subject to certain regulatory approvals and other factors. After the sale, TPG is expected to continue pursuing an acquisition of Echostar’s video businesses Dish Network and Sling TV, which was announced in tandem with the DirecTV sale on Monday. The acquisition of AT&T’s 70 percent stake in DirecTV is not contingent upon DirecTV acquiring Dish and Sling, the companies affirmed.
Related: DirecTV announces pending acquisition of Dish video business
In a statement, a spokesperson for AT&T said the divestiture of its 70 percent stake in DirecTV will allow the company to focus squarely on building out its land-based fiber broadband product as well as its fifth-generation (5G) wireless business.
“This sale allows AT&T to continue to focus on being the leading wireless 5G and fiber connectivity company in America,” the spokesperson said. “This transaction also continues to strengthen AT&T’s balance sheet by pulling forward cash expected over the next several years.”
AT&T acquired DirecTV and its related video businesses nearly a decade ago. The deal was valued at just over $67 billion, and was intended to give AT&T greater leverage over other broadband and wireless companies by offering a pay TV service that could be bundled with its home Internet and cell phone products.
That strategy did not produce the intended results. The merger came together at a time when streaming services were challenging the dominance of cable and satellite operators. TV and sports fans took advantage of comparable Internet-based options that came at lower prices, chipping away at the subscriber base of DirecTV and other pay TV operators.
AT&T had to cover some of those costs, and that combined with its multi-billion dollar acquisition of Time Warner is viewed as a primary reason why the company ceded ground to T-Mobile, Verizon, Comcast and Charter, whose 5G wireless and land-based broadband services have scaled rapidly compared to comparable offerings from AT&T. (AT&T split Time Warner, later WarnerMedia, into a separate business in 2022; that company was immediately acquired by Discovery Communications).
