AT&T Is Said to Get Bids Exceeding $15 Billion for DirecTV
AT&T (T) - Get AT&T Inc. Report shares rose Wednesday after a report said the telecom giant has garnered bids for DirecTV that valued the division at more than $15 billion, including debt.
The Wall Street Journal report cited knowledgeable sources.
Shares of the Dallas company recently traded at $31.50, up 2.2%. The stock has slid 19% year to date.
AT&T is trying to pare its heavy debt load. DirecTV has struggled since AT&T paid $63 billion for it in 2015. Viewers have fled traditional satellite and cable in favor of Internet streaming to view TV and other video content, a process known as cord-cutting.
The bidders include Churchill Capital IV CCIV, a special purpose acquisition company, and private-equity titan TPG, the sources said.
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PE giant Apollo Global Management (APO) - Get Apollo Global Management Inc. Report, which was seen as the frontrunner to snag DirecTV, proposed less than $15 billion, some of the sources said.
If AT&T comes to an accord with one of the bidders, a deal may be finalized early next year, the Journal reported.
Morningstar analyst Michael Hodel puts fair value for AT&T at $37, but says DirecTV represents a burden.
“In the years since the deal closed, AT&T has lost about a quarter of its traditional television customer base (DirecTV satellite customers and AT&T’s own U-verse subscribers), with customer losses accelerating sharply recently,” he wrote in an April report.
“About 80% of AT&T’s television customers receive service via satellite, a base particularly susceptible to online competition. ... AT&T’s online (over-the-top, or OTT) television offerings have struggled to balance growth and profitability, as competition with new entrants like YouTube (GOOGL) - Get Alphabet Inc. Class A Report and Hulu (DIS) - Get Walt Disney Company Report remains fierce.”
