AT&T has received at least three offers valuing its struggling satellite division DirecTV at more than $ 15 billion, a fraction of the amount the US telecommunications group paid in a high-profile deal there was. five years.
Churchill Capital Corporation IV, the latest special-purpose acquisition company set up by ex-citigroup trader Michael Klein, and private equity firm Apollo Global Management are among the bidders, said three people familiar with the process.
A deal, which could be announced early next year, would see AT&T draw a line under one of the worst performing acquisitions made by the recently retired group chairman and CEO. Randall Stephenson, whose legacy has been stained by bad acquisitions.
AT&T acquired DirecTV for almost $ 50 billion in 2015, then divested its Latin American business into a new company called Vrio, which is not for sale. The over $ 15 billion valuation that the offers give DirecTV includes Unit Debt.
The telecoms group, which is trying to to reinvent oneself as a diversified media and tech company following the $ 85 billion acquisition of Time Warner last year, it has focused most of its efforts on building a streaming service, HBO Max, capable of compete with Netflix.
AT & T’s Pay TV Division Decline in Third Quarter Revenue
The deal with DirecTV has drawn fierce criticism from activist investor Elliott Management, which last September acquired a $ 3.2 billion stake in AT&T. Elliott, who has since left the stake, said the deal led to “damaging results” and AT&T bought DirecTV “at the absolute top of the linear television market.”
The Wall Street Journal first reported the news of the deals for DirecTV.
AT&T declined to comment.
The pandemic has taken a heavy toll on the media activities of AT&T, which includes the Warner Bros. movie studio, as theaters across the United States remained closed and production suspended.
Speculation about a potential sale of DirecTV began almost as soon as AT&T closed the deal in 2015. Shortly after, cord cuts halted subscriber growth and the service hemorrhaged approximately 7 million customers since 2017. Revenue for AT & T’s pay-TV division has fallen by around 10%. cent in the third quarter to $ 10.1 billion.
Concluding that the cut of the cord is likely to continue, AT&T redirected resources that would have been used to retain customers to its streaming services and other projects.
John Stankey, who took over from Stephenson as chief executive this year, helped design AT & T’s expansion into pay television and media. But since his takeover, he has sought to unwind several of these transactions, in part to repay the group’s heavy debt.
Mr Stankey said there were “no sacred cows” in the review of the assets he oversees. People close to the company say it has explored options to sell its digital advertising division Xandr as well as Crunchyroll, the anime streaming service.
AT&T has received expressions of interest for CNN but has played down reports of a potential sale. He also looked at options for getting rid of Warner’s gambling decision, but backed out of a sale.