AT&T announced today that it has sold a 30 percent stake in DIRECTV to private equity firm TPG in a transaction giving the telco  $7.8 billion in cash. The telco bought DIRECTV in 2015 for $49 billion, but it has lost more than six million subscribers since the purchase and most industry analysts agree that the satellite TV industry is in rapid decline.

TPG and AT&T said they will establish a new company named DIRECTV that will own and operate the satellite TV service as well as the streaming service, AT&T TV, and the AT&T-owned U-verse.

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AT&T said the deal values the new DIRECTV company at $16.215 billion. Under the agreement, the new DIRECTV will be governed by a board with two representatives each from AT&T and TPG as well as a fifth seat for the CEO, who will be Bill Morrow, a top AT&T executive.

In a statement, AT&T and TPG said they believe the new structure will provide “greater focus, flexibility and resources” to permit the TV services to succeed in the long term.

“This agreement aligns with our investment and operational focus on connectivity and content, and the strategic businesses that are key to growing our customer relationships across 5G wireless, fiber and HBO Max,” AT&T CEO John Stankey stated. “And it supports our deliberate capital allocation commitment to invest in growth areas, sustain the dividend at current levels, focus on debt reduction and restructure or monetize non-core assets. As the pay-TV industry continues to evolve, forming a new entity with TPG to operate the U.S. video business separately provides the flexibility and dedicated management focus needed to continue meeting the needs of a high-quality customer base and managing the business for profitability. TPG is the right partner for this transaction and creating a new entity is the right way to structure and manage the video business for optimum value creation.”

“Video remains a core service for tens of millions of households. Since its launch in 1994, DIRECTV has continually evolved its product, content and service to provide customers an industry-leading video offering. As video consumption habits evolve, the new DIRECTV will continue investing in its offering to provide value to its customers, including through next-generation streaming pay-TV services,” said David Trujillo, a TPG partner. “TPG looks forward to partnering with AT&T and new DIRECTV leadership to bring the right focus, attention and execution in support of new DIRECTV’s position as a competitive video provider for the benefit of its customers and employees.”

AT&T said it expects the deal to close in the second half of 2021.

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