Exclusive: Buyout firm TPG in lead for stake in AT&T’s DirecTV – sources

(Reuters) – Private equity firm TPG has entered into exclusive talks to acquire a minority stake in AT&T Inc’s satellite TV division, DirecTV, in a deal that would allow the U.S. wireless carrier to trim its net debt of close to $150 billion, people familiar with the matter said on Friday.


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FILE PHOTO: The AT&T logo is seen on a store in Golden, Colorado United States July 25, 2017. REUTERS/Rick Wilking

The exact price TPG is willing to pay could not be learned, but sources said the deal could value DirecTV at more than $15 billion. Were the negotiations to conclude successfully, a deal could be announced in the coming weeks, added the sources, who requested anonymity because the matter is confidential.

AT&T and TPG declined to comment.

AT&T shares rose close to 1% on the news to an intraday high of $29.05, giving the company a market capitalization of nearly $210 billion. The shares unofficially closed Friday at $28.92, up 0.3%.

The advanced talks with TPG are the culmination of an auction that AT&T ran for DirecTV for several months. The deal would crystallize a financial hit for AT&T, which valued DirecTV at about $67 billion including debt when it agreed to acquire it in 2014.

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Since then, DirecTV has been bleeding subscribers, with users shifting to less costly online streaming services such as Netflix Inc and Amazon.com Inc’s Prime service.

AT&T has said it lost 590,000 subscribers in the third quarter spanning its DirecTV, U-verse and AT&T TV platforms. It is under pressure to trim its swelling debt pile as it invests more in 5G and other wireless services.

AT&T’s biggest deal, its $85 billion acquisition of media conglomerate Time Warner in 2018, has soured in the wake of the COVID-19 pandemic, as a plunge in movie theater attendance weighs on its film revenue.

WarnerMedia, the segment that contains HBO and the company’s movie and TV studio, generated revenue of $7.5 billion in the third quarter of 2020, down from $8.4 billion in the year-ago quarter.

Thanks to more people seeking entertainment at home, however, AT&T reported 38 million subscribers in the United States for both its premium TV channel HBO and HBO Max during the third quarter, reaching its goal for 2021 a year early.

TPG, which previously invested in companies in the sector such as U.S. regional cable TV operator Astound and Spanish language broadcaster Univision, has about $85 billion in assets under management, according to its website.

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