AT&T reportedly considers selling big minority stake in DirecTV

AT&T is in talks with private-equity firms to sell a “significant” minority stake in its pay-television businesses including DirecTV, according to a report.

A number of private equity firms including Apollo Management are said to be submitting bids for the units, which also include AT&T U-Verse and AT&T Now businesses, CNBC reported Tuesday. Bids are due in early December.

While valuations haven’t been determined, a deal may value DirecTV at less than $15 billion including debt, CNBC said. The Post reported last month that AT&T was fielding lowball offers “well below $20 billion.” AT&T acquired DirecTV in 2015 for $67 billion including debt. A deal will not include the unit’s Latin American business, the report noted.

As part of a potential deal, AT&T would shift the legacy assets off AT&T’s balance sheet, CNBC said, citing anonymous sources.

The report said that under the terms of the proposed deal, telecom giant would retain majority ownership of the businesses, and would maintain ownership of U-verse infrastructure. Additionally, the buyer would control the pay-TV distribution operations and consolidate the business on its books.

In recent months, AT&T has been trying to unload non-core assets in order to reduce its $150 billion plus debt load, and focus on growing its streaming service, HBO Max.

DirecTV, which has been hemorrhaging subscribers, has been top of AT&T’s list. AT&T ended the third quarter with about 17 million legacy TV subscribers (DirecTV and U-verse combined), down more than 16 percent from a year earlier. AT&T Now customers fell 40 percent to 683,000.

“AT&T is trying to do something very hard,” MoffettNathanson analyst Craig Moffett said, “They have to manage a portfolio of declining businesses by slashing their costs, while still not hurting their cash generation prospects too badly, while simultaneously finding a way to sustain a dividend, pay down debt enough to placate rating agencies, and, all the while, invest in the few growth areas they’ve got that are worthy (wireless, HBO Max, and fiber-based broadband).”

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