AT&T is reportedly fielding offers to sell its DirecTV satellite service, as the service shrinks due to the rise of streaming options.
AT&T bought DirecTV in 2015 for $66 billion, including debt. Since that time, however, the service has lost millions of subscribers — far more than rival Dish Network — and has increasingly become a lead weight around AT&T’s neck.
According to the Wall Street Journal, AT&T is fielding bids in excess of $15 billion, including debt, a far cry from what the company paid five years ago. Among the potential buyers are Churchill Capital Corp. IV and private-equity firm TPG. The WSJ says the auction is already in the late stages, with a completed deal possible in early 2021.
The TV industry has become one of the most hated industries in America in recent years, in terms of customer satisfaction. Many companies charge equipment rental fees, hidden fees and regularly hike prices after brief “introductory prices.”
While satellite TV often scores higher in customer satisfaction than cable options, it has still been heavily impacted by streaming services. Hulu with Live TV, YouTube TV, fuboTV, Sling and, most recently, T-Mobile’s TVision are often seen as cheaper alternatives that give customers more options and control. When TVision was released, T-Mobile CEO Mike Sievert specifically emphasized no annual contracts, no exploding plans and half the cost of cable.
AT&T’s divesture of DirecTV is just the latest example of this widespread digital transformation that is occurring.