Speculation on the future of AT&T’s DirecTV unit intensified after a report emerged indicating the US operator was considering parting ways with the struggling satellite provider it acquired for $49 billion four years ago.
Wall Street Journal reported the US operator was mulling various options for DirecTV, including a possible sale to rival Dish Network or spinning out the business into a separate public company.
However, Reuters, citing a person familiar with the matter, threw cold water on a possible tie-up with Dish, citing possible regulatory issues making the move highly unlikely.
AT&T CFO John Stephens also suggested last week that while there had been speculation about putting two satellite providers together, it would be difficult from a regulatory perspective.
Indeed, Dish attempted to combine with DirecTV in 2014, but ultimately lost out to AT&T.
A spin-off appears a more likely route, although that would not happen until 2020 to make it more tax efficient for the operator.
AT&T’s DirecTV unit was thrown into the spotlight when shareholder Elliott Management attacked the operator’s M&A activity, questioning why it needed to own content assets Time Warner and DirecTV.
That, coupled with the fact the company lost almost 800,000 premium TV subscribers in Q2, including DirecTV users, has seemingly forced AT&T to look at its strategy.
In response to Elliott’s criticism, AT&T CEO Randall Stephenson backed its big money media buys, but did concede that some of the points raised by the investor would be looked at.
Immediately after acquisition DirecTV was seen as a key pillar of the operator’s content and media play, though it has since struggled to compete with online streaming services including Netflix and Amazon Prime.
WSJ added ultimately, AT&T could decide to keep DirecTV in its ranks. The unit is part of the company’s entertainment and consumer wireline unit, which made up 27 per cent of the company’s total $173.3 billion revenue in 2018.
AT&T has previously defended DirecTV’s performance, pointing out it has millions of subscribers and helps its convergence play to combine fibre optic TV customers and mobile users.Subscribe to our daily newsletter Back