In 2015, AT&T, an American telecommunications brand, proposed to acquire DirecTV at a value of $48.5 billion, which ranked among the biggest mergers in recent history. The takeover was cleared by the regulators later in the year and thus, AT&T began operational ownership of DirecTV. This handed AT&T an authoritative stake in one of the biggest pay-TV companies in the nation that boasted over twenty million users back then.
AT&T Ltd acquired DirecTV several years ago as a subsidiary to capitalize on its large subscriber base and satellite transmission capabilities to offer bundled services with AT&T mobile, internet and other services. It was in line with the broad framework within which AT&T sought to be a converged telecommunication, media and technology company.
However, the scenario in 2020 revealed that DirecTV added no value or minimal value to AT&T as it was expected. The traditional pay-TV industry was in a decline as the consumers moved towards the inexpensive streaming services like Netflix and Hulu. Specifically, the satellite TV player, DirecTV was in decline, going from a high of 21 million subscribers in 2016, to about 17 million.
Thus, in February 2020 AT&T stated about acquiring a minority stake in DirecTV to the private equity firm TPG Capital but the firm will remain 70% owner and have operational control. The acquisition was completed at $95 per share, which was significantly lower than the $100 per share that AT&T paid for DirecTV only 5 years ago. Unlike some of its peers that had very high initial debt levels due to large acquisitions such as DirecTV, TPG’s investment played a role in balancing the debt levels.
However, AT&T considered the option of completely divesting from the ownership of DirecTV later in 2021. August saw them agreeing to merge DirecTV with a rival satellite TV provider, DISH Network, in a merger.
However, the transaction was not a sale but a spin-off which implies that Wrigley was never sold by its management but rather spun off to new owners. In July of 1999, Internet service Provider decided to divest DirecTV and form a new independent company that was named DirecTV Holdings. DISH then owns 25% majority controlling interest in DirecTV Holdings LLC whereas AT&T owns a minority 25% interest. In the technical sense, AT&T still has less than half of the Charter, but it left the day-to-day management.
DirecTV and DISH could be considered to be merged because it united two largest satellite TV providers that both reported declines. It means that together they can work on combining the operations and potentially attempt at managing the industry declines better. Another service division was divested from the company and which is also was helpful in lowering the debt, as the company is now more strategic towards 5G and fiber broadband service, rather than satellite pay-TV through DirecTV.
Therefore, to answer the question: no, currently, AT&T does not own or directly control DirecTV as it used to in mid 2022. However, it does control a diluted 25% of the new merged company DirecTV Holdings, while AT&T becomes the majority shareholder.
Thus, the previously independent company DISH Network now owns the merged company due to the majority holding. And AT&T is gradually divesting from pay-TV business as the company focuses more on wireless services, fibre broadband connections, and streaming content through platforms like HBO Max.
The latter was the biggest acquisition of DirecTV for $48 billion in 2015, which is still considered one of the biggest of AT&T. And selling it just a few years later for a couple of cents on the dollar of its original purchase price shows that much has happened in the pay-TV world since then. Entering merger with DISH Network is DirecTV’s last ditch effort to remain sustainable in a shrinking satellite television business that is slowly falling to streaming services.
Thus, although AT&T abandoned most of the majority control, it probably still would like to gain profit if DirecTV Holdings can cope with industry losses with the help of DISH and TPG’s participation. However, for AT&T’s shareholders and management, shielding the company from over $16 billion of debt that came with DirecTV appears to be a higher priority as the company develops for a future anchored by 5G and fiber-to-the-home. In other words, within only 6 years after AT&T bought DirecTV for $48 billion, it managed to reverse the process and transfer its video subscribers to a new company it has only a partial ownership in.
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