AT&T takes huge DirectTV hit as it spins-off video businesses 

AT&T has announced plans to spin-off its video businesses, including DirecTV, into a new company worth a fraction of what it paid for the troubled satellite provider.

The new business, currently referred to as New DirecTV, will house DirecTV, AT&T TV, and U-Verse. AT&T will hold a 70% stake in the company, while investment firm TPG Capital will control the remaining 30%. 

AT&T said that the transaction separating the US video business “implies an enterprise value for the new company of $16.25 billion.”

This figure represents a huge comedown from the US$67 billion that AT&T spent on DirectTV when it purchased the company in 2015. That deal valued DirecTV at US$48.5 billion, while AT&T took on nearly US$20 billion in debt.

At the time it was agreed, the deal was considered a poor investment but the mega-merger has gone on to be considered as one of the worst media acquisitions of the 2010s.

Speaking after the news was announced, AT&T CEO John Stankey admitted that  “we certainly didn’t expect this outcome when we closed the DirecTV acquisition in 2015.”

Stankey said that “consumers aren’t going to see a change,” and that WarnerMedia channels will remain a core part of DirecTV’s offers.

The move comes at a time when AT&T is increasingly building its business around WarnerMedia streaming service HBO Max, and selling off non-core assets.