The next time you peer into a bargain bin, don't be surprised to find DirecTV in there.
Undaunted by "lowball bids" for its struggling satellite TV unit, AT&T is still pushing ahead with an auction for DirecTV, the New York Post reported Tuesday.
The auction is "shaping up to be a fire sale," the report added, noting that AT&T last week invited a "handful" of potential suitors – largely made up of private equity firms – into a second round of the auction. Dish Network is reportedly not participating in the auction, despite a recent declaration from Dish founder and chairman that a merger of Dish and DirecTV was "inevitable."
The first-round bids valued DirecTV at below $20 million, according to the pub, citing sources familiar with the process. An opening bid from Apollo Global Management reportedly came in at about 3.5 times DirecTV's approximate $4.5 billion of EBIDTA, implying a valuation of about $15.75 billion.
AT&T acquired DirecTV for almost $50 billion in July 2015. Amid sharp satellite TV subscriber losses, AT&T has largely relegated DirecTV to rural areas without access to solid broadband connections. AT&T, meanwhile, has been pivoting its pay-TV business to AT&T TV, a relatively new contract-based, big bundle offering that's delivered via the Internet. It also continues to sell AT&T TV Now, an OTT-TV service formerly known as DirecTV Now that is contract-free and fitted with slimmer channel bundles. AT&T has already halted the sale of U-verse TV, its legacy IPTV service.
AT&T CEO John Stankey, who proclaimed more than a year ago that AT&T was not interested in unloading DirecTV because he expected the satellite TV unit to have a key role in its advanced ad initiatives (AT&T is also trying to sell its Xandr ad-tech unit), is now "scrambling" to unload DirecTV in a process being led by Goldman Sachs, according to the paper.
It's possible that AT&T could retain a minority stake in DirecTV or take a deal that involves multiple partners, according to an earlier report by The Wall Street Journal.
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— Jeff Baumgartner, Senior Editor, Light Reading