DirecTV becomes standalone video business after split from AT&T
DirecTV announced that AT&T and TPG Capital have closed on the agreement announced in February 2021 to establish DirecTV as a separate video company.
Under this new company, DirecTV owns and operates the former AT&T US and Puerto Rico video business unit.
With the new company, there will no change to the products and services offered in Puerto Rico, and DIRECTV’s “dedication to customer service remains a top priority,” the companies confirmed.
The new structure will allow greater focus, flexibility, and resources to best position the business to succeed in the long term as well as deliver on a commitment to current and future customers, employees, and shareholders.
AT&T contributed its US video business unit to the new entity in exchange for preferred units as well as a 70% interest in the common units of DIRECTV. TPG contributed approximately $1.8 billion in cash to DirecTV in exchange for preferred units and a 30% interest in common units of the new company.
The DirecTV board will include Bill Morrow, CEO of DirecTV, and the following additional voting board members: Steve McGaw and Thaddeus Arroyo, appointed by AT&T; and David Trujillo and John Flynn, appointed by TPG.
At close, AT&T received $7.1 billion in cash ($7.6 billion net of approximately $470 million cash on hand) and transferred approximately $195 million of video business debt. AT&T expects this transaction will help support its debt reduction efforts, with plans to reach a net debt-to-adjusted EBITDA of below 2.5x by year-end 2023.
Not included in this transaction are WarnerMedia’s HBO Max streaming platform and regional sports networks, both of which are part of the pending WarnerMedia-Discovery transaction; Vrio (AT&T’s Latin American video operations, which are being sold to Grupo Werthein); U-verse network assets; and AT&T’s Sky Mexico investment.
DirecTV will continue to offer HBO Max to subscribers along with any bundled wireless or broadband services and associated customer discounts.
“This is a watershed moment for DirecTV as we return to a singular focus on providing a stellar video experience,” said Bill Morrow, CEO of DirecTV. “Building on our recent momentum, we are well-positioned to bring unparalleled choice and value to all of our customers under one iconic brand whether they beam it or stream it.”