In the summer of 2015, telecom giant AT&T closed its acquisition of satellite powerhouse DirecTV, touting its new role as"the largest pay TV provider" in the world. Price tag: $67 billion, including debt. AT&T ended that year with 25.4 million U.S. pay TV subscribers.
“AT&T’s DirecTV is inarguably one of the worst acquisitions of all time,” MoffettNathanson analyst Craig Moffett wrote to his clients after the deal was unveiled. “Most put the ‘real’ valuation of the deal at closer to $12 billion.” The driving factor: cord-cutting and the rise of streaming. For TPG, whose media investments also include CAA and Spotify, the complex deal allows the firm to get a 30 percent stake in the video business for just $1.8 billion in cash. It is betting on buying in at a low price and leveraging its experience in taking stakes in businesses and working with existing owners to improve their performance.
Some hope though another deal step will follow down the line, as Cowen analyst Colby Synesael wrote: “We’d note a potential merger with Dish is likely the most compelling opportunity.” Bernstein’s Peter Supino echoed that, saying AT&T “retains plenty of exposure to the potential synergies of a merger with Dish.”
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