AT&T disappointed with offers for struggling DirecTV

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AT&T’s attempt to unload ­DirecTV has been thrown into doubt, as the telecom giant has signaled it’s unhappy with the offers it has received for the struggling satellite-TV service, The Post has learned.

Earlier this month, AT&T pushed back a deadline for final bids for DirecTV into January — and told prospective bidders it may cancel the auction altogether if it doesn’t get better offers, according to sources close to the situation.

On Dec. 9, The Wall Street Journal reported that a fresh round of bids came in at more than $15 billion including debt. But insiders tell The Post that AT&T — dissatisfied with those offers — has invited private-equity giant TPG Capital to study the books in hopes that it will make a binding offer that props up the price.

Other participants include Apollo Global Management, which according to sources offered less than $15 billion including debt; and investing tycoon Michael Klein’s blank-check company Churchill Capital Corp. IV.

Indeed, AT&T’s threat to cancel the auction appears to have surprised bidders, including Klein. Last week, Klein priced a second blank-check company, Churchill Capital Corp. V, at $450 million, leading some to speculate he had been confident of closing the DirecTV deal this month.

Now, Klein — who according to one source had voiced optimism about “good news” regarding DirecTV in the coming days — is in the unusual position of having two blank-check companies searching for deals.

Bidders are surprised by AT&T’s threat to pack up and go home partly because its DirecTV business continues to shrink amid rising competition with video-streaming platforms like Netflix — and, more recently, AT&T’s own HBO Max service.

Last week, a report by New Street Research predicted that DirecTV’s EBITDA — or earnings before interest, taxes, depreciation and amortization, a key financial metric — will plunge to $3 billion in 2022 from around $4.5 billion this year.

Sources said buyout proposals in the $15 billion range call for the purchaser to pay something close to $3.75 billion in exchange for a 49 percent stake in the company, with AT&T keeping a slightly larger sum to maintain a majority interest. The remaining $7.5 billion would be financed by new debt.

AT&T, which didn’t return a request for comment, could use the proceeds to participate in upcoming spectrum auctions, pay down debt or to pay dividends, sources said.
Nevertheless, that’s a painful markdown for AT&T, whose former Chief Executive Randall Stephenson in 2015 shelled out $49 billion for DirecTV plus a mountain of debt that brought the total to $66 billion.

The fact that bids didn’t improve enough in the latest round appears to have rankled AT&T’s new boss, John Stankey, who wants to retain a majority stake in the satellite-TV unit while giving the winning bidder operating control of the company for tax reasons.
New Street Research believes AT&T also needs the proceeds to compete in upcoming auctions of cellular spectrum.

DirecTV is still bleeding subscribers after offering promotions at discounts that were too steep, a source close to the auction said.

In the third quarter, DirecTV lost 690,000 net customers, leaving it with 13.6 million, according to cable-TV research consultant Bruce Leichtman.

Compared to last year, DirecTV’s subscriber base has plummeted 19 percent versus a 3.8 percent drop at archrival Dish Network and a 6 percent drop at cable-TV giant Comcast. While Leichtman believes the worst may be over for DirecTV, he said it likely will continue to lose more customers than its peers.

“There will need to be more of a focus now on acquiring customers,” Leichtman said. “If there is a different owner of DirecTV, that’s going to diminish losses.”

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