...August 6, 2024 DirecTV's credit metrics remain strong for the rating. We expect S&P Global Ratings-adjusted leverage to remain around 1.5x over the next two years (1.4x as of March 31, 2024, rolling 12- month basis). The company's board is focused on maintaining debt to EBITDA below its stated leverage target of 1.5x. The company generates solid free operating cash flow (FOCF) and has the financial flexibility to manage this metric in the face of significantly declining earnings. Given that the company operates below this threshold, S&P Global Ratings expects that it will apply a substantial portion of its FOCF towards dividends (partly for tax purposes) to keep leverage between 1.0x-1.5x. Higher leverage could be caused by an acquisition or change in ownership mix. Private-equity TPG owns a 30% stake in the company and DirecTV is governed by a board of five voting members: two representatives from AT&T (70%), two TPG representatives, and the CEO, Bill Morrow. Material actions, including...
