AT&T Inc. is now looking at its DirecTV business from another angle, sources with information of the matter disclosed, as the company struggled with subscriber losses in the period of cable-slashing and the growing popularity of online videos and streaming.
DirecTV could now see its market value fall at way below the nearly $50 billion AT&T paid for the service in 2015 after millions of clients dumped their DirecTV subscription starting in 2018 as the company added new rates to its satellite offerings. A deal could give the business a value of less than $20 billion, the Wall Street Journal said, quoting sources.
AT&T bought Time Warner in 2018 for around $80 billion that added in its programming inventory HBO, cable channel CNN and a film outfit by Warner Bros. The full takover of DirecTV made AT&T the largest pay-per-view television provider in the U.S. – a bragging right that it eventually relinquished to Comcast as the satellite business began to mellow.
AT&T and its Goldman Sachs Group advisers have been discussing with private-equity investors about a potential sale of its satellite TV business, sources said. Interested companies include Platinum Equity and Apollo Global Management Inc., reports said.
Shares of AT&T were up 1.2 percent in extended sessions and closed at 30.04 Friday on the New York Stock Exchange, after the Journal report. DirecTV currently has around 17.7 million subscribers in the U.S., decreasing from over 23 million two years ago.
DirecTV's pains reflect a crisis that traditional multichannel video programming distributors are experiencing in an era of plunging sales in video subscriptions and mounting operational expenditures for the host of channels they offer in huge packs to consumers.
As new technologies and platforms like Netflix, Disney+, YouTubeTV, and HuluTV rise to dominance, the cable and satellite business take the backseat. Without a balanced competition, the Internet-based options could also operate like cable by charging higher subscription fees. Until a healthy balance is made, the company with the biggest fan base and financial muscle will dictate how things go.
The top bosses at AT&T have recently examined the possibility of disposing of DirecTV's key assets, including a merger with top competitor Dish Network, but technicalities and brushes with regulators have kept the proposition from taking off.
