AT&T is turning DirecTV into a standalone company

ATT just

announced an agreement

with private equity firm TPG that will turn DirecTV into a standalone company, albeit one that’s still majority owned by the telecom giant.

Specifically, ATT says it will own 70% of the new company, while TPG owns 30%. This transaction values DirecTV at $16.25 billion — a dramatic decline from

the $48.5 billion that ATT paid

to acquire the pay TV provider in 2015, part of a wave of telecom-media acquisitions. (Verizon owns TechCrunch thanks to its acquisition of AOL

.)

Even with new offerings

like ATT TV

(which will be part of the standalone company, along with the DirecTV and U-Verse services) pay TV subscriptions have been declining, with ATT reporting a net loss of 617,000 premium video subscribers in its most recent quarter

. ATT is trying to point out the positive trends in the numbers by noting that “it hit its peak level of subscriber losses in 2019” and that “premium video net losses had improved sequentially for five straight quarters.”

Meanwhile, ATT made an even bigger acquisition

with Time Warner

(now known as WarnerMedia), and its TV ambitions seem to be focused on the streaming service HBO Max

.

“As the pay-TV industry continues to evolve, forming a new entity with TPG to operate the U.S. video business separately provides the flexibility and dedicated management focus needed to continue meeting the needs of a high-quality customer base and managing the business for profitability,” said ATT CEO John Stankey in a statement. “TPG is the right partner for this transaction and creating a new entity is the right way to structure and manage the video business for optimum value creation.”

The company said the transaction should close in the second half of 2021. The combined entity is expected to pay ATT $7.8 billion, which the telecom company will use to reduce debt. ATT also said that when the transaction closes, DirecTV’s CEO will be Bill Morrow, currently CEO of ATT’s U.S. video unit.

The Wall Street Journal

reported last year

that ATT was exploring a deal for DirecTV.

FCC Approves $48.5 Billion ATT-DirecTV Merger