AT&T has announced it reached a deal with TPG Capital to spin off its pay-tv businesses, DirecTV, AT&T TV Now and U-Verse, for $16.25 billion. The new entity, which will be known as DirectTV, will be headed by Bill Morrow, the head of AT&T’s video unit.
The spin-off is an attempt to close an ugly chapter for AT&T after it acquired DirecTV in 2015 for $67 billion including debt. The company took on a crushing amount of debt in order to complete the purchase, and now the abject failure of the strategy is clear.
AT&T’s attempts to pay down debt and divest non-core assets in recent years has been driven in-part by the activist stake taken by Elliot Management in 2019.
However, this deal is by no means a complete exit from the business for AT&T. Following the spin-off TPG will own 30% of the company while AT&T will still own the remaining 70%, so it has yet to fully divest itself.