TPG to Acquire AT&T’s 70% Stake in DIRECTV

Rhea-AI Summary

TPG, a global alternative asset management firm, has announced an agreement to acquire AT&T's remaining 70% stake in DIRECTV. This transaction is expected to provide DIRECTV with a stronger financial platform to increase investments in innovative video offerings. TPG will invest through its TPG Capital platform, deepening its existing partnership with DIRECTV.

The deal includes an initial payment of $2.0 billion to AT&T during 2025, with additional payments totaling $500 million in 2029. AT&T expects to receive approximately $7.6 billion in cash payments from DIRECTV through 2029. A special distribution of at least $1.625 billion is also planned before March 31, 2025.

The transaction is expected to close in the second half of 2025, subject to regulatory approvals. DIRECTV will continue to be led by its current management team, including CEO Bill Morrow.

Positive

• TPG's acquisition provides DIRECTV with a stronger financial platform for increased investments
• AT&T to receive approximately $7.6 billion in cash payments from DIRECTV through 2029
• Special distribution of at least $1.625 billion planned before March 31, 2025
• DIRECTV's current management team, including CEO Bill Morrow, will continue to lead the company

Negative

• Initial payment of $2.0 billion to AT&T is subject to certain deductions
• Transaction completion is subject to regulatory approvals, which could potentially delay or affect the deal

Insights

Financial Analyst

This acquisition of AT&T's remaining 70% stake in DIRECTV by TPG is a significant move in the media and telecommunications landscape. The $2.0 billion initial payment, with additional payments totaling $500 million by 2029, represents a substantial investment. AT&T's expected $7.6 billion in cash payments through 2029 indicates a structured deal that provides long-term value.

For TPG, this transaction strengthens its position in the content distribution sector and allows for greater control over DIRECTV's strategic direction. The focus on investing in next-generation streaming services is important in the evolving media consumption landscape. This move could potentially increase TPG's revenue streams and market share in the competitive streaming industry.

Investors should note the potential for improved financial flexibility for DIRECTV, which could lead to accelerated growth and innovation. However, the pay-TV market faces challenges from cord-cutting trends, so the success of this investment will largely depend on DIRECTV's ability to adapt and grow its streaming offerings.

Media Industry Expert

This acquisition marks a significant shift in the pay-TV landscape. DIRECTV, once a powerhouse in satellite television, is now poised for a strategic pivot under TPG's full ownership. The emphasis on "next-generation streaming services" is telling - it signals a recognition that the future of video content lies in streaming rather than traditional satellite delivery.

The retention of DIRECTV's current management team, including CEO Bill Morrow, suggests continuity in operations while allowing for new strategic directions. This could be important for navigating the transition from legacy systems to more modern content delivery platforms.

The multi-billion dollar annual revenue from streaming services mentioned in the article indicates that DIRECTV has already made significant inroads in this space. With TPG's backing and expertise in digital media, there's potential for substantial growth. However, competition in the streaming market is fierce, with established players like Netflix, Disney+ and Amazon Prime Video dominating the landscape. DIRECTV will need to carve out a unique value proposition to succeed in this crowded field.

Stronger Financial Profile to Enable DIRECTV to Accelerate Investments in Innovative Next-Generation Streaming Services

Transaction Reflects TPG’s Long-Term Focus on Content Distribution and Ability to Provide Bespoke Solutions to Corporate Partners

SAN FRANCISCO & FORT WORTH, Texas--(BUSINESS WIRE)-- TPG (NASDAQ: TPG), a leading global alternative asset management firm, today announced it has reached an agreement to acquire from AT&T the remaining 70% stake in DIRECTV that it does not already own. TPG will invest in DIRECTV through TPG Capital, the firm’s U.S. and European private equity platform.

Since 2021, DIRECTV has operated as a joint venture between AT&T and TPG consisting of DIRECTV, DIRECTV STREAM and U-verse video services previously owned and operated by AT&T. This transaction is expected to provide DIRECTV with a stronger financial platform to increase investments in innovative video offerings that benefit consumers.

This transaction will strengthen TPG’s existing partnership with DIRECTV, and TPG’s proven expertise in the internet, digital media and communications sectors will support DIRECTV’s efforts to grow its next-generation streaming service, which has millions of subscribers and delivers multi-billion dollars of revenue annually.

“This transaction is the right next step for DIRECTV as we advance our vision and continue to evolve our product to offer consumers the broadest array of content,” said Bill Morrow, CEO of DIRECTV. “Our team is the best in the business, and we are driven to provide innovative video services with an outstanding customer experience. We are eager to deepen our support from TPG and invest in our video services to benefit customers nationwide.”

“DIRECTV is a pioneer in pay TV, and we are eager to continue to support the company’s innovation of value-oriented streaming and video offerings for consumers,” said David Trujillo, Partner at TPG. “DIRECTV will be in a stronger position to reinvigorate its core product offerings and accelerate investment in its next-generation streaming service. We look forward to continuing to support DIRECTV, alongside its talented team, to accelerate the company’s strategic vision.”

“DIRECTV has a 30-year legacy of innovating for consumers while providing greater value and better service than incumbent providers, and we are thrilled to extend our highly successful partnership together. With this transaction, DIRECTV will be better able to invest in advancing the next generation of video services that benefit consumers and provide a broad diversity of programming,” said John Flynn, Partner at TPG.

Transaction Terms

Under the terms of the transaction, TPG will make an initial payment of $2.0 billion, subject to certain deductions, to AT&T during 2025 and additional payments to AT&T totaling $500 million in 2029. AT&T expects to receive approximately $7.6 billion in cash payments from DIRECTV through 2029. The transaction also contemplates that DIRECTV will make a special distribution prior to March 31, 2025, of at least $1.625 billion that will be paid to the equity holders of DIRECTV, proportional to their respective ownership positions.

The transaction is expected to close in the second half of 2025, subject to customary closing conditions, including receipt of required regulatory approvals. Upon completion of the transaction, DIRECTV will continue to be led by its current management team, including CEO, Bill Morrow.

Advisors

Barclays is serving as lead financial advisor to TPG, and BofA Securities, Evercore, LionTree and Morgan Stanley also provided financial advice. Ropes & Gray LLP, Cleary Gottlieb Steen & Hamilton LLP and Mintz, Levin are serving as legal advisors to TPG.

About TPG

TPG is a leading global alternative asset management firm, founded in San Francisco in 1992, with $229 billion of assets under management and investment and operational teams around the world. TPG invests across a broadly diversified set of strategies, including private equity, impact, credit, real estate, and market solutions, and our unique strategy is driven by collaboration, innovation, and inclusion. Our teams combine deep product and sector experience with broad capabilities and expertise to develop differentiated insights and add value for our fund investors, portfolio companies, management teams, and communities.

Forward Looking Statements; No Offers

This document contains “forward-looking statements.” Forward-looking statements can be identified by words such as “expect,” “will” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we make regarding the expected benefits, timing and terms of the transaction.

Forward-looking statements are based on our current expectations and assumptions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by any forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the inability to realize the anticipated benefits of the contemplated transaction or to close the transaction on the timeline we expect; and regional, national or global political, economic, business, competitive, market and regulatory conditions, among various other risks discussed in the Company’s SEC filings.

For the reasons described above, we caution you against relying on any forward-looking statements, which should be read in conjunction with the other cautionary statements included elsewhere in this document and risk factors discussed from time to time in the Company’s filings with the SEC, which can be found at the SEC’s website at http://www.sec.gov. Any forward-looking statement in this document speaks only as of the date of this document. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update or revise any forward-looking statement after the date of this document, whether as a result of new information, future developments or otherwise, except as may be required by law. No recipient should, therefore, rely on these forward-looking statements as representing the views of the Company or its management as of any date subsequent to the date of the document.

This document does not constitute an offer of any TPG Fund.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240929836245/en/

Media

Luke Barrett / Courtney Power

TPG

415-743-1550

media@tpg.com

Tom Johnson / Dan Scorpio

H/Advisors Abernathy

212-371-5999

Tom.johnson@h-advisors.global / dan.scorpio@h-advisors.global

Source: TPG Inc.

FAQ

What percentage of DIRECTV is TPG acquiring from AT&T?

TPG is acquiring AT&T's remaining 70% stake in DIRECTV, which it does not already own.

When is the TPG-DIRECTV acquisition expected to close?

The transaction is expected to close in the second half of 2025, subject to customary closing conditions and regulatory approvals.

How much will AT&T receive from the DIRECTV deal?

AT&T expects to receive approximately $7.6 billion in cash payments from DIRECTV through 2029.

Will there be any changes to DIRECTV's management after the acquisition?

No, DIRECTV will continue to be led by its current management team, including CEO Bill Morrow, after the transaction is completed.