AT&T Enters Late Stage of DirecTV Auction, Fielding Offers Above $15 Billion -- Update
By Cara Lombardo and Drew FitzGerald
AT&T Inc. received bids for its DirecTV unit valuing the
satellite-TV service at more than $15 billion including debt,
according to people familiar with the matter, as the widely watched
auction winds toward a resolution.
Among those submitting bids above that level was Churchill
Capital Corp. IV, a blank-check company run by former banker
Michael Klein, the people said. Apollo Global Management Inc., long
seen by many as the front-runner to buy DirecTV, submitted a bid
valuing the business at less than $15 billion, some of the people
The auction is in a late stage and should the company reach a
deal with one of the suitors, it could be completed by early next
A deal could allow AT&T to deconsolidate DirecTV's worsening
financial results -- a major aim of the transaction -- while
relinquishing control even as it maintains a majority stake in the
The Wall Street Journal reported in August that AT&T had
tapped bankers to explore a deal to take the fast-shrinking
business off its books. The media-and-telecom company bought
DirecTV in 2015 for about $49 billion, or $66 billion including
debt. (Its Latin American satellite business, also acquired through
the DirecTV takeover, is now held in a separate unit called
The pay-TV business has lost millions of subscribers in recent
years as viewers switch to on-demand entertainment services like
Netflix Inc. AT&T's pay-TV losses have far outpaced declines at
rivals like Comcast Corp. and Dish Network Inc. The company has
shed 7 million U.S. video connections over the past two years.
Those customer losses have weighed on AT&T's stock, which
has barely moved over the past five years and is down about 20% so
far this year. The company's market value stands at about $220
AT&T executives have said they are making progress
stabilizing the domestic pay-TV unit so that its customer losses
fall in line with industry averages. But Chief Executive John
Stankey has also said he is willing to shed any business that draws
attention away from the Dallas company's core wireless, broadband
and streaming-video units.
"We still have opportunities to do some things around
rejiggering our portfolio," Mr. Stankey said Tuesday at a UBS Group
AG investor conference. "We'll continue to force ourselves to look
at those hard decisions."
A large asset sale would give the company more resources to keep
improving its wireless service, which still generates more than
half of its pretax profits, without threatening the company's
all-important credit rating. Analysts expect AT&T and its
rivals to wager billions of dollars on the Federal Communications
Commission's latest auction of cellular spectrum, which launched
Tuesday. Such auctions can saddle cellphone carriers with massive
one-time bills for the licenses they win.
AT&T has amassed a large war chest -- Mr. Stankey on Tuesday
said it has $10 billion of cash on hand -- that it could use to bid
on the wireless licenses over the coming weeks. But executives must
balance that potential spending with funds marked for future debt
repayments, a roughly $15 billion annual dividend and about $21
billion for planned capital expenditures.
--Miriam Gottfried contributed to this article.
Write to Cara Lombardo at email@example.com and Drew
FitzGerald at firstname.lastname@example.org
(END) Dow Jones Newswires
December 09, 2020 10:25 ET (15:25 GMT)
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