AT&T Considers Restructuring DIRECTV Over Time Warner Deal

AT&T is considering a restructuring of DIRECTV, likely in order to accelerate its proposed acquisition of Time Warner should it be successful in its efforts to defend it in court this spring, Bloomberg reported Wednesday, citing a statement from the company. The division of DIRECTV that's presently being inspected is the Latin America unit which owns the majority of Sky Brasil and has a 41-percent stake in Sky Mexico, in addition to running its own satellite TV service in the vast majority of the region. AT&T is understood to be mulling over the idea of filing for an initial public offering of the unit, thus listing it independently and separating it from the rest of the business it acquired in 2015 for approximately $48.5 billion.

It's presently unclear how close the telecom giant is to reaching a decision on the matter, though allowing for an independent DIRECTV spin-off in Latin America would be in line with its previous concessions provided to certain regulators who mandated local Sky units operate independently of Time Warner. AT&T's next proposed purchase owns Turner Broadcasting System which runs a number of popular channels such as CNN, TBS, TNT, Adult Swim, Cartoon Network, and Boomerang. An independent listing could allow AT&T to raise as much as $10 billion, a significant sum that could be used toward its $85.4 billion purchase of Time Warner, though it's currently unclear whether financing the deal would be the main motivation for opting for such a move. AT&T is reportedly also considering divesting its data center business and was previously said to have been deliberating over a sale of Digital Life for much the same reasons. A standalone business in Latin America would also be more suitable for future M&A activities than a subsidiary.

The deadline for AT&T's merger with Time Warner has already been pushed on two occasions while the U.S. Department of Justice led a lengthy antitrust investigation into the proposal, ultimately deciding to file a lawsuit against the firm in order to block it. The unprecedented move will see the regulator argue against a vertical consolidation, the type of big business tie-ups that have traditionally been allowed by Washington without much scrutiny. The telecom giant and the DOJ will next face off in court on March 19 when the trial over the proposed merger is scheduled to start.

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