Research Update: DirecTV Entertainment Holdings LLC Rated 'BB-' On Spin-Off From AT&T; Outlook Stable; Debt Rated 'BB'

U.S.-based AT&T Inc. agreed to contribute its pay-TV distribution business, consisting of DirecTV, AT&T TV, and U-Verse, into a joint venture with private equity sponsor TPG Capital in a transaction valued at about $16.25 billion. AT&T will have a 70% economic stake and TPG 30% of the new DirecTV. However, the board composition will be evenly split. We assigned a 'BB- issuer credit rating to DirecTV Entertainment Holdings LLC (DTV). We also assigned a 'BB' issue-level rating and '2' recovery rating to wholly owned subsidiary DirecTV Financing LLC's proposed senior secured credit facilities, which will consist of a $500 million revolving credit facility due in 2026 and $3.1 billion first-lien term loan due in 2027. The '2' recovery rating indicates

...- U.S.-based AT&T Inc. agreed to contribute its pay-TV distribution business, consisting of DirecTV, AT&T TV, and U-Verse, into a joint venture with private equity sponsor TPG Capital in a transaction valued at about $16.25 billion. AT&T will have a 70% economic stake and TPG 30% of the new DirecTV. However, the board composition will be evenly split. - We assigned a '##- issuer credit rating to DirecTV Entertainment Holdings LLC (DTV). - We also assigned a '##' issue-level rating and '2' recovery rating to wholly owned subsidiary DirecTV Financing LLC's proposed senior secured credit facilities, which will consist of a $500 million revolving credit facility due in 2026 and $3.1 billion first-lien term loan due in 2027. The '2' recovery rating indicates our expectation for substantial (70%-90%; rounded estimate: 80%) recovery in the event of payment default. - The stable outlook reflects our expectation that despite sharp revenue and EBITDA declines because of video subscriber losses, DTV...

Research Update