AT&T is now taking bids from various companies to purchase DIRECTV, but the early offers are far below the $49 billion the company paid for the satellite TV service in 2015.
That’s according to an article published last night by the New York Post.
“Opening bids from a coterie of buyout firms came in at around 3.5 times DIRECTV’s roughly $4.5 billion of Ebitda, implying a valuation at around $15.75 billion, according to a source close to the process,” the newspaper writes.
The New York Post reports that Apollo Global Management, a private equity firm, could be one of the companies making a bid. However, the newspaper adds that Dish, DIRECTV’s top satellite rival for more than two decades, is not involved in the bidding.
The Wall Street Journal reported last month that negotiations between Dish and AT&T stalled last year when anti-trust concerns emerged. (The two companies tried to merge nearly 20 years ago, but the Federal Communications Commission nixed the deal on the grounds it would reduce consumer choice.)
Dish Chairman Charlie Ergen is known to be a difficult negotiator, and that could have derailed the talks as well.
“Rival satellite-TV provider Dish Network — whose billionaire boss Charlie Ergen once said a merger of Dish and DirecTV is “inevitable” — isn’t participating in the auction, according to sources. That’s after a failed bid last year by Stephenson to merge the two that ran into antitrust concerns,” the Post writes.
Dish, of course, could still try to buy DIRECTV after/if it’s sold to another company, particularly if it’s an equity firm that might buy it to flip it.
The Post did not confirm which companies have bid for DIRECTV. The newspaper says an AT&T spokesperson would not comment when asked about the bids.
AT&T is looking to sell DIRECTV for two main reasons:
1. The satellite TV service has lost roughly six million subscribers since AT&T purchased it due to cord-cutting and what some would argue is AT&T mismanagement.
2. AT&T has decided that the satellite TV business has a bleak future, unlike streaming which is growing in popularity. The company has invested heavily in HBO Max, a new streaming service that’s an expanded version of the pay TV HBO.
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— Phillip Swann