Private equity firm TPG struck a $7.6 billion deal to acquire the remaining stake held by AT&T in satellite television provider DirecTV, as the firm seeks to grow DirecTV’s streaming service in a crowded field.
The deal comes as DirecTV snatches up rivals Dish and Sling TV from EchoStar with financial backing from TPG Angelo Gordon, a real estate and credit platform.
The two acquisitions would put TPG in control of a pay-TV giant with an estimated 20 million subscribers. But the scale of the challenge is vast: DirecTV and Dish have failed to compete with streaming rivals like Netflix, prompting their majority owners to refocus their efforts elsewhere.
In exchange for AT&T’s 70% stake in DirecTV, TPG will pay $2 billion upfront and $500 million in 2029. The remainder will come in the form of distributions to AT&T by DirecTV.
DirecTV plans to acquire Dish for a nominal fee of $1 while assuming $9.75 billion in debt. TPG Angelo Gordon and others are investing $2.5 billion to provide Dish liquidity and refinance some of its debt.
TPG aims to strengthen DirecTV’s financial position and scale its operations to provide innovative streaming services to its millions of subscribers.
DirecTV was acquired by AT&T in 2015 and six years later entered into a partnership with TPG, which purchased a 30% stake for $1.8 billion in 2021.
The sale of AT&T’s majority stake frees up cash for the telecom giant to focus on other initiatives, including its 5G wireless and fiber connectivity services. Last year, the distributions AT&T received from DirecTV fell 23% to $2.04 billion, Reuters reported.
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