The future status of the DirecTV satellite TV and U-verse telco-TV services could be changing again following reports that AT&T is talking to private equity firms to sell portions of certain legacy pay-TV assets.

A report by CNBC citing sources familiar with negotiations Tuesday said AT&T has engaged talks with private equity firms, including Apollo Management, to sell a substantial minority stake in its pay-TV distribution operations, including its legacy DirecTV, U-Verse and AT&T Now services.

The report described the possible transaction terms as “complicated” and focused on moving legacy TV service assets off AT&T’s books. The media conglomerate has watched U.S. subscriber counts steadily decline since acquiring DirecTV for $16 billion in 2015. DirecTV’s Latin American operations are reportedly not part of the discussions.

The report said the proposed terms have AT&T retaining majority economic ownership of the pay-TV businesses, including the U-verse infrastructure, that involves plants and fiber optic lines that AT&T also uses for its broadband services.

CNBC cited undisclosed sources familiar with the discussions indicating that the potential buyer would get between a 30% to 49% stake in the combined pay-TV distribution operation including the ability to consolidate any operations on its books.

CNBC said final bids are expected by early next month. The asking value was not known, but it is expected to be significantly lower the price AT&T original paid for DirecTV. AT&T had about 17 million legacy TV subscribers (including DirecTV and U-verse combined) at the end of the third quarter, down 16% from a year earlier. The AT&T Now live OTT subscriber count dropped 40% to 683,000 in the period.

AT&T has been under pressure from investors to sell-off certain non-growth assets, including DirecTV.

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Of course, exactly a private equity firm would do with the DirecTV “legacy TV assets” and its pricing structure isn’t known yet. However, such acquisitions typically involve quickly growing investor value by stripping off costs, gaining market share by removing competition from a particular business segment and consolidating overlapping operations with similarly held assets.

The legacy TV services will also face a market that has seen significant subscriber erosion to less-expense over-the-top (OTT) live streaming services and premium streaming app services that enable customers to cherry pick the type of content they are most interested in having.

Meanwhile, Charlie Ergen, chairman of EchoStar/Dish Network, has said a merger between some components of the competitive Dish satellite TV service and DirecTV seemed “inevitable.” But prior attempts to merge the operations were denied by federal agencies. Since then the pay-TV business landscape has changed dramatically. But Ergen generally looks for majority control of acquisitions.

DirecTV has offered videophiles one of the few options available to receive 4K Ultra HD sports, movies and special interest content, including the use of the Hybrid Log-Gamma (HLG) HDR profile in the U.S. for certain live broadcast events. The service’s dedicated 4K channels, available with special equipment and on a higher-priced subscription tier, includes many prominent professional, collegiate and international sporting events, making it an attractive option for some 4K and 8K Ultra HDTV purchasers.

As a satellite-delivered platform, DirecTV also provides pay-TV services to many rural subs that remain out of reach of cable and telco-TV delivered services. DirecTV also controls distribution of the lucrative NFL Sunday Ticket out-of-market football game package.

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By Greg Tarr

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