AT&T Can’t Find a Buyer for DirecTV Latin America Business

(Bloomberg) -- AT&T Inc. has struggled to interest potential buyers in Vrio Corp., its declining Latin American satellite-TV division, after actively peddling it for at least four months, according to people familiar with the situation.

The problem with Vrio adds to the big challenges AT&T faces in its effort to raise cash and pay down debt by selling noncore businesses in a difficult market. The people asked not to be identified discussing private information. AT&T declined to comment.

Vrio is part of a growing list of assets under review or with bids being solicited for sale. New Chief Executive Officer John Stankey is looking to streamline AT&T by jettisoning nonessential businesses that the company added during its go-big-or-go-home era of mega-acquisitions.

Since Stankey took over in July, businesses that the company has explored selling include DirecTV, the similarly waning U.S. satellite-TV service; Xandr, the digital-advertising unit; and Crunchyroll, the anime streaming service. AT&T recently pulled its gaming division, Warner Bros. Interactive Entertainment, off the market.

Vrio, which consists of AT&T’s DirecTV operations in Latin America and parts of the Caribbean, has been a challenge ever since AT&T acquired it along with the rest of DirecTV in 2015. Within months of closing the deal, AT&T wrote down $1.1 billion of its Venezuelan DirecTV business due to the political instability in the country. In May of this year, AT&T closed its DirecTV business in Venezuela.

In 2018, AT&T abandoned its plan to sell a portion of Vrio through an initial public offering, even after reducing the number of shares on offer and cutting the target price.

In the second quarter, including the shutdown of DirecTV in Venezuela, Vrio’s subscriber count fell 21% to 10.7 million from 13.5 million a year earlier. That knocked service revenue down 27% to $752 million, and the division posted an operating loss of $79 million for the first half of 2020, compared with an $18 million gain for the same period last year.

That’s complicated buyers’ efforts to find the right price for Vrio. Its falling value has made it difficult for even AT&T to put an exact number on it.

Due to the political crisis in Venezuela and the effects of the Covid-19 pandemic, AT&T said in a 10-Q filing last month that it recorded a further $2.2 billion in goodwill impairment. “It is more likely than not,” AT&T said in the filing, that the fair value of the Vrio reporting unit “is less than its carrying amount.”

AT&T shares were up 0.4% to $29.62 at 9:50 a.m. in New York. The stock is down 24% this year.

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