AT&T has officially exited the entertainment business after closing the sale of its remaining 70% stake in DirecTV, giving full control to TPG.
The private equity firm, which has $258 billion in assets under management, previously acquired a 30% stake in the satellite TV operator back in 2021, which valued the business at $16.25 billion at the time.
“DirecTV is a proven pay TV innovator, and we are excited to deepen our highly successful partnership at a pivotal time for the industry,” TPG partner David Trujillo said in a statement. “This transaction reflects our confidence in DirecTV’s management team and their ability to continue delivering exceptional value and a truly innovative streaming service to customers.”
“DirecTV has the broadest diversity of programming available today, a portfolio of innovative video products and a legacy of providing better value than incumbent providers,” TPG partner John Flynn added. “The company is well-positioned to compete and thrive in a rapidly evolving content and technology landscape.”
Under TPG’s full ownership, DirecTV CEO Bill Morrow said the company has “big plans to increase investments in innovative video services to deliver the best entertainment experience at the right value for our customers nationwide.” It last disclosed a total of around 10 million pay TV subscribers.
Following the deal’s closing, independent board member Steve McGaw, as well as all of AT&T’s appointees, AT&T chief strategy and development officer Thaddeus Arroyo, AT&T global marketing officer Lori Lee and AT&T senior vice president of global human resources and labor relations Jamie Barton, have all stepped down from DirecTV’s board.
Meanwhile, former Sony Pictures Entertainment CEO Tony Vinciquerra has joined the DirecTV board. Vinciquerra is currently a member of Madison Square Garden Sports’ board and has previously served as a board member at Qualcomm, Pandora Media, Univision Communications, Motorola and Fox Networks Group.
In 2015, AT&T acquired DirecTV for $49 billion, or $67 billion when including debt. But by 2021, AT&T had taken a $15.5 billion write-down on the video business, sold its WarnerMedia unit to Discovery Inc. and divested the 30% stake to TPG.
AT&T agreed to sell the remaining 70% stake in DirecTV back in September. The company previously agreed to not sell it for a three-year period, which expired in July 2024.
During the three-year period, AT&T said it “achieved financial outcomes consistent with its expectations that underpinned its decision to retain a 70% financial interest in DirecTV.”
It added that the sale of the remaining stake would allow the company to “continue to focus on being the leading wireless 5G and fiber connectivity company in America” and would strengthen AT&T’s balance sheet by “pulling forward cash expected over the next several years.”
AT&T previously said it expects to receive approximately $7.6 billion in cash payments from DirecTV and TPG through 2029, which includes $1.7 billion in pre-tax quarterly distributions in the second half of 2024, $5.4 billion after-tax cash distributions and other payments not subject to tax in 2025, and $500 million in final payments in 2029 of after-tax proceeds.
The deal between AT&T and TPG was struck at the same time that DirecTV agreed to merge with Dish Network, though the combination between the two pay TV companies would later fall apart. The stake sale was not contingent on the DirecTV-Dish merger closing.
Shares of AT&T have climbed 51% in the past year and 24% year to date.
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