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Tara Lachapelle

AT&T Cuts the Cord Before More Customers Do

The wireless carrier is finally spinning off DirecTV to make room for the debt it'll need to win in 5G and streaming.

AT&T's DirecTV deal dud ends the way it began: with a price that makes investors shake their heads.

AT&T's DirecTV deal dud ends the way it began: with a price that makes investors shake their heads.

Photographer: Patrick T. Fallon/Bloomberg

If AT&T Inc. starts to look like it’s standing a bit taller, that’s the result of it no longer stuck carrying around the weight of a mangled satellite business.

The wireless carrier announced late Thursday that it’s separating DirecTV and its other U.S. pay-TV products — AT&T TV and U-Verse — into a separately run company that will be 70% owned by AT&T and 30% owned by private equity firm TPG Capital. The transaction values the business being carved out at $16.25 billion including debt, a fraction of the $67 billion that AT&T paid for DirecTV in 2015. Needless to say, it did not earn a particularly high return on the DirecTV investment, but at this point, the value of not owning this antique collection is the true prize.