AT&T announced that it will be selling its 70% stake in DIRECTV to private equity firm to TPG for $7.6 billion. AT&T bought DIRECTV in 2015 and signed a joint venture agreement with TPG a few years ago. TPG paid about $1.8 billion in cash for a 30% stake in DIRECTV when the valuation of the satellite TV company was around $16 billion.
The joint venture between AT&T and TPG consisted of DIRECTV, DIRECTV STREAM and U-verse video services previously owned and operated by AT&T. And this deal is expected to provide DIRECTV with a stronger financial platform to increase investments in innovative video offerings that benefit consumers.
Under the terms of the deal, TPG will make an initial payment of $2 billion, subject to certain deductions, to AT&T during 2025 and additional payments to AT&T totaling $500 million in 2029. And AT&T expects to receive approximately $7.6 billion in cash payments from DIRECTV through 2029. The transaction also contemplates that DIRECTV will make a special distribution prior to March 31, 2025, of at least $1.625 billion that will be paid to the equity holders of DIRECTV, proportional to their respective ownership positions.
The deal is expected to close in the second half of 2025, subject to customary closing conditions, including receipt of required regulatory approvals. Upon completion of the transaction, DIRECTV will continue to be led by its current management team, including CEO, Bill Morrow.
Barclays is serving as lead financial advisor to TPG, and BofA Securities, Evercore, LionTree and Morgan Stanley also provided financial advice. Ropes & Gray LLP, Cleary Gottlieb Steen & Hamilton LLP and Mintz, Levin are serving as legal advisors to TPG.
TPG will invest in DIRECTV through TPG Capital, the firm’s U.S. and European private equity platform.
KEY QUOTES:
“This transaction is the right next step for DIRECTV as we advance our vision and continue to evolve our product to offer consumers the broadest array of content. Our team is the best in the business, and we are driven to provide innovative video services with an outstanding customer experience. We are eager to deepen our support from TPG and invest in our video services to benefit customers nationwide.”
- Bill Morrow, CEO of DIRECTV
“DIRECTV is a pioneer in pay TV, and we are eager to continue to support the company’s innovation of value-oriented streaming and video offerings for consumers. DIRECTV will be in a stronger position to reinvigorate its core product offerings and accelerate investment in its next-generation streaming service. We look forward to continuing to support DIRECTV, alongside its talented team, to accelerate the company’s strategic vision.”
- David Trujillo, Partner at TPG
“DIRECTV has a 30-year legacy of innovating for consumers while providing greater value and better service than incumbent providers, and we are thrilled to extend our highly successful partnership together. With this transaction, DIRECTV will be better able to invest in advancing the next generation of video services that benefit consumers and provide a broad diversity of programming.”
- John Flynn, Partner at TPG
