• by Wayne Friedman , Staff Writer, March 3, 2021

AT&T and investment firm TPG agreed to a complicated deal in which TPG gets a 30% minority stake in a new spinoff DirecTV company. In return, AT&T gets $7.8 billion -- and a new $16.2 billion in value for the new company.

Forget about what it means for AT&T's long-term financials. The company has essentially pushed it to the sidelines -- as well as its other video businesses.

The hope is whether someone can figure out where this TV business remains in the media ecosystem -- one increasingly dominated by internet/digital/virtual companies, not generated by satellites hovering in Earth’s thermosphere.

Some analysts believe rural areas could be a possible improving ground for DirecTV. But major cable TV providers are also looking here, especially for broadband businesses. Dish Network is thinking rural, too.

Craig Moffett, senior research analyst at MoffettNathanson Research, believes a wide ranging stimulus-infrastructure bill next year could also see a possible broadband expansion, helping some of these companies.

However, all that won’t help pay TV providers maintain traditional video TV businesses that have witnessed subscriber declines similar to DirecTV and Dish.

What is left? The return of the merger talks of DirecTV and Dish Network.

While this would help cut losses for both companies, it is not a long-term solution. Even the virtual pay TV business of both companies has not been helping out. Although Dish’s Sling TV is doing better than the former DirecTV Now, Sling is seeing weakening subscriber counts.

The positive? Although the writing is on the wall, AT&T says DirecTV continues to generate hefty cash flow for the company -- some $4 billion a year -- which it expects to continue through 2021.

For its part, Dish Network witnessed declines in some video business. It's acquiring lots of wireless spectrum -- now anticipating starting a wireless 5G broadband business this year.

And if it doesn’t? It could incur some $2 billion in federal penalties. The cost for building a 5G business is pegged at $10 billion.

DirecTV doesn’t have a 5G plan. Parent AT&T company does. Maybe Dish should then consider a deal with different AT&T business units.

All this means both Dish and DirecTV may not be thinking about a potential costly merger, and potential billions in start-up costs to start a new wireless business. Perhaps their focus is just survival, until some promising media/communication dream appears.

No doubt former media-giant companies on the outs, such as AOL and Blockbuster Video, had similar hopeful visions.