Please ensure Javascript is enabled for purposes of website accessibility

Report: AT&T Close to Selling Stake in DIRECTV, TV Now, and U-Verse Business Business

By Eric Volkman - Feb 23, 2021 at 8:42PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The deal could be worth around $15 billion.

AT&T (T 2.22%) might be on the verge of selling several ungainly assets. CNBC, citing people familiar with the matter, reported Tuesday that the telecom giant is nearing a deal to sell a minority stake in its pay TV business, which comprises DIRECTV, TV Now, and U-Verse. The apparent buyer is private equity firm TPG, and the potential sale values the assets at roughly $15 billion.

It was not immediately clear how large a stake is involved in the deal. 

An old TV broadcasting static.

Image source: Getty Images.

What's apparent is that AT&T's pay TV assets are not particularly attractive these days. After all, the in-home entertainment segment has moved away from legacy cable and satellite broadcasting toward on-demand streaming. In 2020, the company shed 4.1 million pay TV customers due in no small part to such dynamics, and booked a $15.5 billion impairment charge on the video business.

Prior to that, it had placed big bets on entertainment becoming a highly complementary activity to its core services. In the case of DIRECTV, it paid $67 billion for the once-independent company (including debt assumption), an amount that most observers considered excessive.

AT&T has a mountain of debt these days; at the end of its Q4, its long-term borrowings stood at nearly $176 billion. If the sale of the minority stake in the pay TV business goes through, the company might use some or all of the proceeds to help reduce that number.

Neither AT&T nor TPG has yet responded to the CNBC story. On Tuesday, the former's shares slumped by 0.5%, while the S&P 500 index closed marginally higher.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

AT&T Inc. Stock Quote
AT&T Inc.
$20.28 (2.22%) $0.44

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.