Equity Method Investments

12 Months Ended

Dec. 31, 2024

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

NOTE 10. EQUITY METHOD INVESTMENTS

Investments in partnerships, joint ventures and less than majority-owned subsidiaries in which we have significant influence are accounted for under the equity method.

Our investments in equity affiliates at December 31, 2024, primarily included our interests in DIRECTV and Gigapower.

DIRECTV We account for our investment in DIRECTV under the equity method of accounting. DIRECTV is considered a variable interest entity for accounting purposes. As DIRECTV is jointly governed by a board with representation from both AT&T and TPG Capital (TPG), with TPG having tie-breaking authority on certain key decisions, most significantly the appointment and removal of the CEO, we have concluded that we are not the primary beneficiary of DIRECTV. The initial fair value of the equity considerations at the date of acquisition was $6,852, which was determined using a discounted cash flow model reflecting distribution rights and preference of the individual instruments.

The ownership interests in DIRECTV, based on seniority, are as follows:

•Preferred units with distribution rights of $1,800 held by TPG, which have been fully distributed.

•Junior preferred units with distribution rights of $4,250 held by AT&T, which were fully distributed as of December 31, 2023.

•Distribution preference associated with Common units of $4,200 held by AT&T, of which $1,370 of distribution rights remain as of December 31, 2024.

•Common units, with 70% held by AT&T and 30% held by TPG.

On September 29, 2024, we agreed to sell our interest in DIRECTV to TPG for approximately $7,600 in cash payments through 2029, inclusive of third-quarter and fourth-quarter 2024 combined distributions of $1,695. In addition to quarterly distributions through 2025, including payout of common catch-up units, this consideration includes notes payable to AT&T of approximately

$2,550 and a dividend of $1,150. The transaction is expected to close in mid-2025, pending customary closing conditions. We expect a gain on sale, whose amount will be dependent on the timing of close.

Beginning in third-quarter 2024, our investment in DIRECTV was reduced to zero on our consolidated balance sheet, resulting from aggregate cash receipts exceeding our initial investment balance plus our cumulative equity in DIRECTV earnings. As we are not committed, implicitly or explicitly, to provide financial or other support to DIRECTV, we record cash distributions received in excess of our share of DIRECTV’s earnings in “Equity in net income of affiliates” in the consolidated statements of income and as cash provided by operations in the consolidated statements of cash flows.

During 2024, 2023 and 2022, we recognized $2,027, $1,666 and $1,808 of equity in net income of affiliates and received total distributions of $2,955, $3,715 and $4,457, respectively, from DIRECTV. The book value of our investment in DIRECTV was $0 and $877 at December 31, 2024 and 2023.

Our share of net income or loss may differ from the stated ownership percentage interest of DIRECTV as the terms of the arrangement prescribe substantive non-proportionate cash distributions, both from operations and in liquidation, that are based on classes of interests held by investors. In the event that DIRECTV records a loss, that loss will be allocated to ownership interests based on their seniority, beginning with the most subordinated interests.

Gigapower On May 11, 2023, we closed our transaction with BlackRock, through a fund managed by its Diversified Infrastructure business, related to Gigapower, LLC (Gigapower). We hold a 50% interest in this joint venture, which provides a fiber network in select areas to internet service providers and other businesses across the U.S. We deconsolidated Gigapower’s operations and began accounting for it as an equity method investment on May 12, 2023.

SKY Mexico In June 2024, we sold our 41.3% interest in SKY Mexico, a leading pay-TV provider in Mexico.

The following table presents summarized financial information for DIRECTV and our other equity method investments, consisting primarily of Gigapower, SKY Mexico (prior to disposition) and certain sports-related programming investments, at December 31, or for the year then ended:

	2024		2023		2022
Income Statements1,2
Operating revenues	$	20,003	$	22,938	$	25,794
Operating income	2,343		2,873		3,175
Net income	1,811		2,393		2,581
Balance Sheets2
Current assets	2,857		3,058
Noncurrent assets	9,496		12,203
Current liabilities	5,312		5,148
Noncurrent liabilities	7,389		8,193
1Does not include Gigapower for periods prior to May 2023.
2Does not include SKY Mexico after disposition in June 2024.

The following table is a reconciliation of our investments in equity affiliates as presented on our consolidated balance sheets:

	2024		2023
Beginning of year	$	1,251	$	3,533
Additional investments	117		135
Distributions from DIRECTV in excess of cumulative equity in earnings	(928)		(2,049)
Dividends and distributions of cumulative earnings received	(2,033)		(1,668)
Equity in net income of affiliates	1,989		1,675
Impairments	(155)		(450)
Currency translation adjustments	—		61
Other adjustments	54		14
End of year	$	295	$	1,251