DirecTV Now is a Standalone Company

Back in 2015 (though it seems much longer ago than that), a colleague working on U-Verse worried that the deal meant DirecTV would become the “go-to” platform for video entertainment. Some six years later, it is hard to disagree. 

AT&T’s deal to move DirecTV assets into a different company has closed. TPG Capital now will own and operate the DIRECTV, AT&T TV and U-verse video services previously owned and operated by AT&T. 

DIRECTV had approximately 15.4 million premium video subscribers at the end of the second quarter of 2021.

Many describe the transaction as “AT&T getting out of video entertainment.” That is far from correct. AT&T contributed its U.S. video business unit to the new entity in exchange for cash compensation, debt assumption but also retains a 70 percent interest in DirecTV. 

TPG contributed approximately $1.8 billion in cash to DIRECTV in exchange for preferred units and a 30% interest in common units of the new company.

At close, AT&T received $7.1 billion in cash and transferred approximately $195 million of video business debt to the new entity. 

Aside from the asset ownership dilution that frees up cash to pay down debt, AT&T managerial attention can shift back to the core mobility business. But AT&T still owns 70 percent of DirecTV. That is hardly “getting out of the subscription video business.”