AT&T is exploring ways to get rid of satellite TV company DirecTV, according to a new report.
On Wednesday, the Wall Street Journal said company executives were looking at several different options for separating DirecTV from AT&T’s core business. Those options include spinning DirecTV off into a separate company or offering to sell the satellite service to rival Dish Network, the Journal reported.
The news comes just four years after AT&T acquired DirecTV for $49 billion. At the time, AT&T was attracted to numerous elements of DirecTV’s business, including its long-standing deal with the National Football League for the right to offer out-of-market games to customers, a service known to subscribers as the “NFL Sunday Ticket.”
But DirecTV has been losing subscribers every year since AT&T’s acquisition, and efforts to curb the bleed by offering similar services have so far failed.
In 2017, AT&T launched DirecTV Now, a streaming service that offered a handful of top pay TV networks along with the satellite company’s own channel Audience for around $35 a month. Since then, DirecTV Now — later renamed AT&T Now — has fallen behind rivals offered by Dish, Disney, Google and Sony after AT&T reconfigured channel packages and hiked the cost of the streaming service.
Last week, an activist investor released a report urging AT&T to change its strategy around pay television. The investor, Elliot Management Corporation, previously encouraged AT&T to “unload” DirecTV, the Journal said.
A sale to Dish Network would be complicated and likely involve strenuous regulatory scrutiny: In 2001, a proposed merger between DirecTV and Dish Network — both owned by different companies then — was blocked by federal regulators on antitrust grounds. A follow-up merger attempt in 2014 failed after AT&T offered a higher price to acquire DirecTV.
“From a regulatory perspective, it hasn’t been successful and I don’t know that there is any change in that regulatory perspective,” John Stephens, AT&T’s chief finance executive, said at an investor’s conference last week. “I understand the industrial logic, but quite frankly it’s been tried and has been rejected.”
AT&T may ultimately choose to reject activist investor demands and keep DirecTV within the company due to a sizable amount of customer accounts that continue to rack numbers for the telecom giant, the Journal said.
About the Author:
