AT&T Closes DirecTV Spinoff, Video Services Branded DirecTV Stream

AT&T and TPG Capital have closed their transaction establishing a new company named DirecTV. The new company will own and operate the DirecTV, AT&T TV and U-verse video services previously owned and operated by AT&T.

The newly branded DirecTV Stream will become the single brand for video streaming services previously launched by AT&T, excluding HBO Max. The transition will happen later this month. As a part of the deal, AT&T satellite, streaming or IP video customers will automatically keep their video service, any bundled wireless, internet or HBO Max services, and associated discounts with no action needed.

Not included in the transaction are WarnerMedia’s HBO Max streaming platform and regional sports networks, both of which are part of the pending WarnerMedia-Discovery transaction; Vrio (AT&T’s Latin American video operations, which are being sold to Grupo Werthein); U-verse network assets; and AT&T’s Sky Mexico investment. DirecTV will continue to offer HBO Max to subscribers along with any bundled wireless or broadband services and associated customer discounts.

DirecTV had approximately 15.4 million premium video subscribers at the end of the second quarter of 2021.

AT&T contributed its U.S. video business unit to the new entity in exchange for preferred units as well as a 70% interest in the common units of DirecTV. TPG contributed approximately $1.8 billion in cash to DirecTV in exchange for preferred units and a 30% interest in common units of the new company.

The DirecTV board will include Bill Morrow, CEO of DirecTV, and voting board members Steve McGaw and Thaddeus Arroyo, appointed by AT&T; and David Trujillo and John Flynn, appointed by TPG.

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“This is a watershed moment for DirecTV as we return to a singular focus on providing a stellar video experience,” Morrow said in a statement. “Building on our recent momentum, we are well-positioned to bring unparalleled choice and value to all of our customers under one iconic brand, whether they beam it or stream it.”

At close, AT&T received $7.1 billion in cash ($7.6 billion net of approximately $470 million cash on hand) and transferred approximately $195 million of video business debt.

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