AT&T Mulls Ditching DirecTV Auction, NY Post Says

AT&T is disappointed with bids so far, the paper says. But keep in mind the Post has had problems with accuracy before.
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AT&T  (T) - Get Report is mulling a cancellation of its auction for DirecTV after receiving disappointing offers for its beleaguered satellite TV service, the New York Post reports.

The Post attributed the news to knowledgeable sources. AT&T shares recently traded at $29.02, down 1.28%, and have slid about 26% year to date amid a mountain of debt--$158.9 billion as of Sept. 30.

Earlier in December, AT&T extended the DirecTV bidding deadline into January, telling potential suitors it might cancel the auction if it didn’t get higher bids, the Post sources said. To be sure, the Post has had problems with accuracy before.

On Dec. 9, the Wall Street Journal, citing knowledgeable sources, reported that AT&T had garnered bids for DirecTV that valued the division at more than $15 billion, including debt. 

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 using internet streaming to view TV and other video content, a practice known as cord-cutting.

The bidders, according to the Journal's sources, include Churchill Capital IV CCIV, a special purpose acquisition company, and private-equity titan TPG.

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.