AT&T last week announced it was selling a 30 percent stake in DIRECTV to private equity firm TPG, which is headquartered in Fort Worth and San Francisco. DIRECTV will also become a separate company run by TPG, and AT&T executives such as cost-cutting analyst Bill Morrow, who will serve as its CEO. (The company will also include U-verse and AT&T TV.)

The move has drawn mixed reactions from analysts and journalists with some saying AT&T took a major financial and tactical loss while others said it will help the company better prepare for the future.

But what does AT&T think?

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After the announcement, company executives took questions from financial analysts on the deal’s merits and how it could affect how AT&T operates in the coming months and years. Here are the highlights of that presentation:

CEO John Stankey admitted this wasn’t in the company’s long-term plan when it purchased DIRECTV in 2015:
AT&T bought DIRECTV in 2015 for $49 billion with the hope that the satellite TV service would help attract new customers for other company businesses, such as its phone service. However, DIRECTV has lost more than six million subscribers since the deal and more defections are expected in the short and long-term. The effort to stem the satcaster’s losses has taken AT&T’s focus away from what it believes are more viable businesses now, such as streaming.

“We certainly didn’t expect this outcome when we closed the DIRECTV transaction in 2015, but it’s the right decision to move the
business forward consistent with the current realities of the market and our strategy,” Stankey said. “It aligns with our investment and operational focus on connectivity and content and sharpens our focus on the strategic businesses that are key to growing our customer relationships across 5G wireless, fiber and HBO Max.”

Stankey said he believes the new DIRECTV will have a better shot at succeeding in the increasingly competitive pay TV category:
“Through this innovative relationship with TPG, we’re taking our traditional U.S. video assets, DIRECTV, AT&T TV and U-verse, and putting them in a separately controlled and managed business consistent with the organizational and segment structure we announced last month. This allows an independent management team to focus solely on maximizing the value of this leading video portfolio,” Stankey said.

Stankey said TPG has some different ideas on how to run DIRECTV, but he did not specify what they are:
“There are a couple of different avenues or ideas that I think our partners have around what we might be able to do to
position the asset differently moving forward and allow it to create some more value,” he said. “I think just like we evaluated every opportunity for this first step, we will be very diligent in evaluating second step options and weighing them out and looking at them, and they cover a fairly broad landscape of things we can consider.”

He added: “We’re going to have to get this deal done first. (AT&T expects it to close in the second half of 2021.) We want to get the leadership team in place and executing well. And then from there, we can explore what those second options might be, and we’ll do it in combination with our partner. And it’s really important that we do that jointly with them.”

AT&T CFO John Stephens confirmed that the Sunday Ticket would continue on DIRECTV through the 2022 season, and that AT&T will continue to pay the NFL the rights fees for the final two years of the contract.
“Sunday Ticket payments will…it will depend on when the deal closes,” Stephens said. “The contract itself is part of the New DTV, but we are giving them a coverage of up to $2.5 billion for that. Depending upon when it closes, there’s 2 years left on that contract, depending on what part of the season it would close, it may have been something that was already satisfied by us,” Stephens said.

He did not comment on whether AT&T might try to retain the Sunday Ticket past the 2022 season.

Stankey sidestepped a question regarding whether the new DIRECTV will ultimately merge with Dish. 
“As you can imagine, it’s a deal that’s been papered, and there’s a lot of different terms and conditions in it and a lot of different scenarios that might be out there, none of which I’m going to talk about or fill in the public on,” he said.

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