For the second time in as many months, speculation is swirling that AT&T Inc. is looking to unload at least a portion of its DIRECTV pay-TV business.

Citing people familiar with the matter, CNBC reported Nov. 3 that the telecom and media conglomerate is holding talks with multiple private equity firms about a deal that would see AT&T selling a minority stake in its combined pay-TV businesses, including the DIRECTV satellite service, the AT&T TV Now streaming offering and the telco TV U-verse business. DIRECTV's Latin American business is not reportedly a part of the talks.

AT&T did not respond to a request for comment on the report.

While analysts have long suggested AT&T would be better off without DIRECTV, they question what assets exactly AT&T is willing to part with and whether any potential valuation would be high enough to make a deal attractive.

MoffettNathanson pay-TV analyst Craig Moffett told S&P Global Market Intelligence that he has no reason to doubt the latest sales speculation, adding that DIRECTV is an "albatross" around AT&T's neck.

AT&T's video subscribers — including its U-verse, DIRECTV and over-the-top video customers — fell to 17.8 million at the end of the September quarter, down from 25.2 million in September 2018. That equates to a loss of almost 7.4 million subscribers over the course of two years.

CFRA Research analyst Keith Snyder noted that AT&T is facing pressure from investors "to dump as many non-core assets as possible," leading to its recent sale of its stake in Central European Media Enterprises Ltd., as well as the sale of its assets in Puerto Rico and the U.S. Virgin Islands, among other deals.

"I definitely think DIRECTV is on the chopping block, and I'm sure there have been internal discussions about the best way for a sale if they can put one together," Snyder said.

The hurdle to any deal, however, remains valuation. "Selling it at a valuation at or below AT&T’s leverage ratio of around 3.5x EBITDA wouldn't do anything for them. It wouldn't help them de-lever, and it wouldn’t help them sustain the dividend," he said.

According to S&P Global Market Intelligence data, AT&T's debt-to-EBITDA leverage ratio has been trending downward as the company pays off debt, but it remains close to 3.1x as of the end of the third quarter.

However, after adding in operating leases, pension obligations and post-retirement health benefits, Moffet estimates that AT&T is levered at close to 3.5x EBITDA.

According to CNBC, AT&T is looking to take its legacy pay-TV businesses off its balance sheet and have a private equity buyer consolidate those businesses on their books. While no agreement on price has been reached, the report cited two people as saying a deal could value DIRECTV at less than $15 billion, including debt.

By comparison, AT&T paid a total transaction value, including debt, of nearly $64.0 billion when it acquired DIRECTV in 2015.

While AT&T does not break out EBITDA directly for the satellite business, AT&T's entertainment group as a whole, including its wireline TV and broadband business, reported EBITDA of just over $10 billion in 2019.

With talks hovering around $15 billion, 3.5x EBITDA seems well out of reach.

But Tony Lenoir, an analyst with Kagan, a research group within S&P Global Market Intelligence, noted that much could depend on how a deal is structured and what exactly is included. While AT&T's own U-Verse pay-TV business is reportedly part of deal talks, U-verse infrastructure, including plants and fiber, is reportedly not.

Also absent from the list of assets reportedly in play is AT&T TV, the virtual service that has been dubbed the company's distribution workhorse going forward. AT&T TV, which offers a full lineup of pay-TV channels and requires a contract, is different from the skinnier AT&T TV Now offering, formerly known as DIRECTV Now.

With none of the "hard assets," or fiber, in play and no mention made of AT&T TV, "To me, we are really talking about the possibility of selling a minority stake in brand equities," Lenoir said.

He sees a potential deal for the "soft assets" as interesting.

"AT&T would get a cash infusion and keep the DIRECTV, U-verse and AT&T TV Now brands alive, which would allow them to continue their planned transition to AT&T TV," he said.

AT&T could certainly use the cash, according to Snyder, as the company seeks to maintain its hefty dividend, pay down debt and continue its capital expenditures.

"They have a lot of things that they need to spend money on in the next 18 months," Snyder said, pointing to the rollout of their next-generation 5G networks, upcoming spectrum auctions and their moves in the streaming market.

Snyder said his fear is that the company will choose to rein in its capital spending to support the dividend or continue debt reduction. "That's what my big concern is for the company next year," he said, noting that such a move would impede the company's ability to compete on multiple fronts.