Q. I read your article about an equity firm called TPG maybe buying DIRECTV. But you didn’t really say what TPG does and how it would be part of DIRECTV. What is TPG and do they have experience in TV, particularly satellite TV? Why would they be interested in DIRECTV? — Peter, Culver City, California. 

Peter, Reuters and Bloomberg both reported last week that AT&T is negotiating exclusively with TPG, an equity firm, to purchase a minority or majority stake in DIRECTV. The news is significant because previous news reports said AT&T was taking multiple offers to buy DIRECTV. If the talks are now down to one company, that would suggest a sale could be imminent.

So if TPG buys DIRECTV, what does that mean? Would the equity firm run the satellite TV service? And if so, what exactly would it do with DIRECTV that AT&T isn’t doing?

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Who Is TPG?
TPG, which is headquartered in San Francisco and Fort Worth, Texas, was founded in 1992 by three businessmen, William Price III, James Coulter and David Bonderman (now a part owner of the Boston Celtics and the Seattle Kraken, the new NHL expansion team). The company’s mission is to invest in struggling (but potentially viable) companies that lack the capital and/or resources to execute their visions. TPG recoups its investment when the company turns things around and, in some cases, is sold to another company. (Think Dish.)

Over the years, the firm has invested in scores of companies in every conceivable category, including film (MGM Studios), TV (Univision), Internet and digital media (Spotify, Vice, Survey Monkey) and technology (Hotwire, McAfee, Seagate). There’s no doubt that TPG’s management team has an understanding of how entertainment and technology intersect in today’s world.

Would TPG Run DIRECTV?
Probably not. The company tends to invest the capital and then place insiders on the company’s board to help shape its future. TPG would probably allow AT&T’s current executive team to continue running DIRECTV, but it would provide guidance on overall direction, and perhaps add a key executive or two.

Would TPG Change DIRECTV?
TPG prides itself for being a disruptor rather than a status quo company. In an 2019 interview with Bloomberg, Coulter said “as we have been building our teams, we have focused on innovation. And we find that innovators are attracted to innovation…If you look at our portfolio, you would find many more disruptors than traditional incumbents. If you are an incumbent, you are more at risk than any time in my career and probably any time in the last 100 years.”

As a satellite TV provider, DIRECTV has been an industry ‘incumbent’ for years; AT&T has offered little change to its technology and services since it purchased the TV service in 2015. (One of the reasons why DIRECTV has lost roughly six million subscribers since that purchase). So it would be interesting to see how TPG’s influence might change the satcaster. The equity firm’s history would indicate that DIRECTV would definitely do a few things differently with TPG on board.

Why Would TPG Want DIRECTV?
DIRECTV has struggled since the AT&T purchase, but it still has more than 15 million subscribers and it dominates a relatively small category (satellite TV, which also has Dish and Orby TV.) With the right moves, the satcaster could conceivably maintain its market share for a few years, setting up a big payday with a Dish merger. TPG might see this as a ‘buy low and sell high’ proposition.

The TV Answer Man will continue to monitor this story and report back here if and when anything changes. Until then, happy viewing, and stay safe!

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— Phillip Swann