In 2015, AT&T purchased DirecTV for $48.5 billion, or more than $67 billion with an assumption of debt. The satellite service, however, soon entered a steep decline, and earlier this year, AT&T spun off DirecTV into a separate company.
The deal, which was the result of an auction that had lasted since the middle of 2020, led to private equity firm TPG agreeing to pay AT&T $16.25 billion. Following the closing of the deal, “New DirecTV” will be a separate entity, of which AT&T will control 70 percent.
“Under the terms of the transaction, New DIRECTV will be jointly governed by a board with two representatives from each of AT&T and TPG, as well as a fifth seat for the CEO, which at closing will be Bill Morrow, CEO of AT&T’s U.S. video unit,” AT&T said in the announcement of the deal.
Earlier this month, AT&T’s CEO admitted that the purchase of DirecTV had been a mistake.
“Is it a transaction that one would have undertaken if it knew everything that it knew today?” CEO John Stankey said last month, as reported by The Desk. “Probably not.”
Stankey was not the CEO of AT&T at the time of the DirecTV purchase, but he was an AT&T executive, and he did control the DirecTV business starting when AT&T purchased the company.
Earlier this spring, AT&T announced another spinoff of another company it had acquired. The company said in May that it was spinning off WarnerMedia into a combined company with Discovery Networks. AT&T’s $85 billion purchase of the company formerly known as Time Warner had closed less than three years earlier in June of 2018, although in that time they launched the streaming service HBO Max.
The deal was announced May 17 as an effort to “combine WarnerMedia’s premium entertainment, sports and news assets with Discovery’s leading nonfiction and international entertainment and sports businesses to create a premier, standalone global entertainment company.”
AT&T shareholders will own 71 percent of the new company, with Discovery shareholders owning the rest.
“This agreement unites two entertainment leaders with complementary content strengths and positions the new company to be one of the leading global direct-to-consumer streaming platforms,” Stankey said in the merger announcement.
“It will support the fantastic growth and international launch of HBO Max with Discovery’s global footprint and create efficiencies which can be re-invested in producing more great content to give consumers what they want. For AT&T shareholders, this is an opportunity to unlock value and be one of the best-capitalized broadband companies, focused on investing in 5G and fiber to meet substantial, long-term demand for connectivity.”
Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.