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Home / Business / AT&T considers getting rid of DirecTV as TV business thoughts, reports WSJ

AT&T considers getting rid of DirecTV as TV business thoughts, reports WSJ



  An AT&T logo seen on the outside of the building.
Enlarge / An AT&T store in Chicago.

AT&T is considering whether to "part ways" with DirecTV, just four years after buying the satellite company, the Wall Street Journal reported today. The Journal report does not use the word "sales" to describe what AT&T considers, but the end result may be that AT&T no longer owns DirecTV.

"The telecom giant has considered various options, including a spinoff of DirecTV to a separate public company and a combination of DirecTV's assets with Dish Network, its satellite TV rival," the Journal report quoted "citing people familiar with the case. "

It's still early in the process, so AT&T could end up with DirecTV. "AT&T can finally decide to keep DirecTV on the board. Despite the struggles of the satellite service, while consumers are releasing TV connections, it still contributes to a significant volume of cash flow and customer accounts to parents," the magazine reported.

cash generated by DirecTV helps fuel other investments in AT&T and helps the company pay down its "dwindling net debt burden, which stood at more than $ 1

60 billion earlier this year," the Journal report states. AT & T's $ 49 billion DirecTV acquisition contributed to that debt load.

A spinoff of DirecTV is unlikely to happen "until mid-2020 for the first" for tax reasons, the Journal report says.

We contacted AT&T and will update this story if we get an answer.

TV business in rapid decline

AT&T completed its acquisition of DirecTV in July 2015, with high hopes of dominating the pay-TV business using both DirecTV satellite and a new online service based on DirecTV. But AT & T's total video subscribers dropped from $ 25.4 million in Q2 2018 to $ 22.9 million in Q2 2019, and AT&T told investors last week that they expect to lose another 1.1 million TV customers in the third quarter.

Since April, AT&T has had a class action lawsuit claiming that it lied to investors to hide the error in its streaming TV service DirecTV Now. Last week, the lawsuit was updated to include allegations that AT&T supervisors urged sales reps to create fake DirecTV Now accounts and sign AT&T customers on DirecTV Now "without the customer's knowledge."

AT & T's TV strategy was criticized in an open letter last week by activist investor Elliott Management Corp., which has a $ 3.2 billion stake in AT&T. Elliott urged AT&T to consider disposing of DirecTV, which may have helped AT&T investigate whether the TV division should be unloaded.

AT&T also purchased Time Warner Inc. in 2018 and hopes to gain a large portion of the streaming industry with next year's release of HBO Max. But Elliott said, "AT&T has not yet formulated a clear strategic rationale for why AT&T needs to own Time Warner."


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