UPDATE: CNBC is now disputing this story. You can read more here.
Today The Wall Street Journal reported that AT&T is entertaining the possibility of selling its DIRECTV satellite service. According to the report, AT&T is “exploring parting ways with DIRECTV.” This comes a day after Dish Chairman Charlie Ergen said that a merged DIRECTV and Dish combo has “always made sense,” but has always faced the challenge of regulatory approval.
Even though AT&T is reportedly looking to sell its DIRECTV satellite service, it seems doubtful that Dish would be a suitable buyer. This week at the Bank of America Merrill Lynch conference, AT&T’s CFO John Stephens replied to a question about Dish buying DIRECTV.
“So there’s been some stories out there about the industrial logic about putting two satellite providers,” Stephens said. “That’s been tried from a regulatory perspective. It hasn’t been successful, and I don’t know that there’s any change in that regulatory perspective. So understanding industrial logic, put quite frankly, it’s been tried and has been rejected.”
This month, AT&T did warn investors it expects to lose over a million TV customers during the 3rd quarter of 2019. This sale may be a way to try and cut costs as DIRECTV continues to bleed subscribers.
Now, this would not mean AT&T would be getting out of TV. Reports are that AT&T would plan to keep the new AT&T TV streaming service and its sister service AT&T TV NOW.
This news comes as the investment group Elliott Management announced it now owns $3.2 billion of AT&T stock and that it’s pushing for AT&T to sell off DIRECT. According to this long letter, AT&T purchased DIRECTV at its peak, and it’s streaming version DIRECTV NOW (now called AT&T TV Now) has been “poorly executed.” Because of this, Elliott Management is pushing for AT&T to sell off DIRECTV.
Here is the part in the letter from Elliott Management that talks about AT&T:
Beyond the wireless issues detailed above, AT&T has suffered from product issues in other business units that have hampered its ability to remain competitive:
DirecTV Over-the-Top (OTT) Issues: AT&T’s OTT offering, DirecTV NOW (renamed AT&T TV Now), has been poorly executed with delays, technical mishaps, weak customer service and usability issues. Despite describing DirecTV NOW as a replacement for DirecTV, the natural-substitution narrative has not played out. While unsustainably low prices and aggressive promotion did initially help the product scale, the benefits turned out to be very short term in nature. As AT&T raised prices to normalized levels, results rapidly deteriorated. After just two years of existence amidst an otherwise-booming OTT market, DirecTV NOW’s subscriber count is now declining.
When AT&T purchased Time Warner, the DOJ pushed for AT&T to sell DIRECTV. AT&T fought that demand and won a court case for people to be able to keep both DIRECTV and Time Warner. Now it seems with a growing loss of subscribers, AT&T is looking for ways to drop DIRECTV.
This is breaking news more to come soon.
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