AT&T has reached a deal to sell off a minority stake in its satellite TV arm for $7.8 billion, the carrier said Thursday. AT&T and private equity firm TPG will form a new company, called New DirectTV, in which AT&T will own a 70% stake and TPG 30%. The company will include the DirecTV, AT&T TV Now and U-Verse video services.
The deal values AT&T's DirecTV business at $16.25 billion.
Current AT&T video customers will become New DirecTV subscribers once the transaction is completed, and will keep their video service, as well as any bundled wireless and broadband services and HBO Max accounts. There were 17.2 million subscribers of AT&T's US video unit by the end of 2020.
Existing content deals will also transfer over to New DirecTV, including NFL Sunday Ticket.
The new company will be run by two representatives from AT&T and TPG, as well as Bill Morrow, CEO of AT&T's US video unit.
It follows reports in August thatto private equity firms in a deal worth less than $20 billion.
The move comes as AT&T focuses more on streaming services after AT&T's WarnerMedia launched streaming service HBO Max in July 2020. is the most expensive streaming service on the market, costing $15 a month.
AT&T launched AT&T TV in March 2020 to provide DirecTV channels over internet streaming rather than satellite. AT&T TV was designed to replace DirecTV and traditional cable TV. It features live TV channels -- including ABC and Fox, plus cable channels such as ESPN, TNT, Nickelodeon and HGTV -- that are streamed over the internet., its cable and satellite alternative, in January this year. The carrier had
AT&T was reportedly first looking to ditch DirecTV or merge it with Dish in 2019 after it lost 4 million pay TV subscribers in 2019, ending that year with 20.4 million subscribers in the US.