DirecTV

History

2021: AT&T and TPG Capital have created DirecTV to manage video services

In early August 2021, AT&T and private investment company TPG Capital completed a deal to separate TV business from AT&T, creating a new company called DirecTV, which will own and manage the video services of DirecTV, AT&T TV and U-verse. The company will also combine its streaming services under the single brand DirecTV Stream.

At the end of June 2021, DirecTV had approximately 15.4 million subscribers to premium videos. During the ownership of AT&T, pay television units suffered heavy losses to their subscribers and the new company quickly assured consumers that it intends to provide better services.

AT&T and TPG Capital set up DirecTV to manage video services

This is a turning point for DirecTV, as we return to a single direction, namely the provision of excellent video services. Based on recent experience, we have every chance to provide unparalleled choice and value to all our customers under the same legendary brand, whether they broadcast videos or not, said Bill Morrow, CEO of DirecTV.

The company said the new DirecTV Stream brand will be a single brand for streaming video services previously launched by AT&T, with the exception of HBO Max.

The transition will occur after August of the month of 2021, and the service will still be available without any long-term liabilities or hidden payments.

DirecTV also stressed that as part of the transaction, AT&T customers using satellite, streaming or IP video will automatically save their video services. Any bundled wireless, Internet or HBO Max services, as well as corresponding discounts without any adjustments, will remain with customers.

As part of the allocation, AT&T transferred its video services division in the United States to the new enterprise in exchange for preferred shares, as well as a 70% stake in ordinary DirecTV shares.

TPG contributed about $1.8 billion to the DirecTV in exchange for preferred shares and a 30% stake in the ordinary shares of the new company.

The board of directors of the DirecTV will include Bill Morrow, CEO of DIRECTV and the following additional voting board members: Steve McGough and Thaddeus Arroyo, appointed by AT&T; David Trujillo and John Flynn appointed by TPG.

At the time of the close of the transaction, AT&T received $7.1 billion ($7.6 billion minus approximately $470 million in cash at the cash desk) and transferred approximately $195 million in video business debt. AT&T expects this deal to help support debt reduction efforts by planning to reach a net debt-to-adjusted EBITDA ratio below 2.5x by the end of 2023.

According to the publication, AT&T has accumulated large debts when entering the media business, acquiring DirecTV and Time Warner and now the telecommunications company will reorient its capital to investments in 5G.^[1]

Notes