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AT&T explores ways to separate business from DirecTV: WSJ

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.

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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 10 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
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