AT&T Now Trying To Ditch DirecTV After Bungled Merger Spree

from the told-you-so dept

It wasn't supposed to go this way.

AT&T purchased DirecTV in 2015 for $67.1 billion (including debt). The company then gobbled up Time Warner in 2018 for a cool $86 billion. Together, these deals were supposed to cement AT&T as a dominant player in the video advertising wars to come. Instead, they created a convoluted mess that resulted in a mass exodus of pay TV subscribers. In fact, a combination of bungled integration, massive debt, price hikes, and confusing branding have resulted in AT&T losing 7 million subscribers since 2018. That's obviously not the kind of M&A fueled sector domination AT&T executives like Randall Stephenson (since "retired") envisioned.

Now AT&T is reportedly trying to offload DirecTV entirely:

"AT&T Inc. is seeking private equity investors to buy the majority of its DirecTV satellite-television business, helping it cope with a major drag on its operations, according to people familiar with the situation. Such a move could let AT&T remove DirecTV from its books while potentially still giving it access to some of the cash flow, said the people, who asked not to be identified because the deliberations are private."

Many investors balked at AT&T's 2015 plan to acquire a satellite TV provider on the eve of the streaming video and cord cutting revolution. AT&T stumbled forward anyway. Ultimately, AT&T attempted to pay off the debt load created by its M&A mania by raising prices on consumers, despite promising antitrust regulators that wouldn't happen. Those already price-sensitive customers then simply flocked to more affordable alternatives AT&T was trying to compete with in the first place. AT&T's confusing array of differently branded streaming efforts didn't help matters.

In mid-2018, AT&T had roughly 25.45 million pay TV subscribers across all of its TV services, including its IPTV service (formerly U-Verse), DirecTV, and its creatively named "AT&T TV" streaming platforms. As of last quarter, AT&T had just 18.41 million pay TV subscribers.

Even massive handouts from the Trump administration haven't helped the telecom and media giant. Both the deregulation at the FCC (repealing net neutrality, killing FCC broadband privacy rules, weakening overall FCC regulatory authority) and the $42 billion AT&T received from the Trump tax cuts were supposed to "drive investment" and boost employment. Instead, AT&T has laid off 41,000 employees since 2017 and dropped its overall 2020 CAPEX by around $3 billion.

Aren't mindless megamerger "synergies" and utterly captured regulators an amazing sight to behold?

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Filed Under: failures, mergers, statellite tv, tv
Companies: at&t, directv


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  • icon
    Anonymous Anonymous Coward (profile), 1 Sep 2020 @ 7:15am

    Not unexpected

    But somehow it seems like the frosting on the cake is made from dung. AT&T loses, their customers lose, AT&T's investors lose, and whomever winds up with Direct TV will probably also lose. The inevitable outcome of hubris.

    And let us not forget how programming distributors will take advantage, in every way they can.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 1 Sep 2020 @ 7:49am

    But the sellers of ATT bonds made out like vampire-bandits, sucking out 5-10% of the total sale price in brokerage fees. And the CEOs of ATT:---oh, the insanity!--have pension money to start new businesses bigger than Elon Musk's, or buy yachts bigger than Queen Mary's. (I'm betting they go with option B here.)

    As in murders, so in mergers: follow the money.

    reply to this | link to this | view in chronology ]

  • icon
    rkhalloran (profile), 1 Sep 2020 @ 7:52am

    classic monopoly mindset

    Stephenson came up through SW Bell's hierarchy, apparently with the old monopoly mindset well-entrenched by the time they bought up the rump-AT&T operation and took the name.

    He assumed they could slap the Deathstar logo on something and have people rush in for it. At this point they run screaming.

    At present I have a 'triple play' bundle with them for DIrecTV, FTTH gig internet and VOIP, which contract runs out in the fall. At that point we may keep the fiber, which is giving us free HBO, but if they can't get their act together with Roku it's off to toast.net, a reseller without data caps. For the rest Hulu Plus and maybe Ooma will drop our media bill by about 2/3.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 1 Sep 2020 @ 6:05pm

      Re: classic monopoly mindset

      You can sideload the HBO Max app on roku devices btw. It's slightly easier on FireTVs but still fairly straightforward on roku.

      reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 2 Sep 2020 @ 8:43am

      Re: classic monopoly mindset

      He assumed they could slap the Deathstar logo on something and have people rush in for it. … At present I have a 'triple play' bundle with them for DIrecTV, FTTH gig internet and VOIP

      So, it kind of did work. It also doesn't really matter: maybe he just assumed this would fool the board or investors, but whatever he thought, the reality is that he made $30 million/year and will be making about $275000/month from his retirement package.

      Perhaps he's more astute than you give him credit for, and milked the monopoly just long enough to bail before it imploded. Personally, I think it will run a while longer, and I'll bet they'll still make money from Hulu and whatever you mean to "replace" them with.

      reply to this | link to this | view in chronology ]

  • identicon
    Pixelation, 1 Sep 2020 @ 8:31am

    Deaf and blind

    If they took the time to find out why people are leaving DirecTV and worked to give them what they want at a reasonable price, maybe...just maybe, they could stop the bleeding and make it work. I imagine DirecTV is saddled with some really crappy contracts with the networks. Good luck to anyone willing to toss money at this thing.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 1 Sep 2020 @ 8:40am

      Re: Deaf and blind

      Direct TV has the problem that it is watch to their schedule, while streaming TV is watch when you want. That difference will gradually kill Off air, cable and satellite TV.

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 2 Sep 2020 @ 12:26pm

        Re: Re: Deaf and blind

        watch to their schedule [...] will gradually kill Off air, cable and satellite TV.

        Most cable systems can already do on-demand TV. Over-the-air and satellite systems can emulate that to some degree, with early transmission and storage of shows that are expected to be popular. It's possible they'll evolve in this direction for a while before finally dying—if they see enough of a market in low-infrastructure areas.

        I'm always amazed at how bad traditional TV networks can get, while still having people put up with them. When I visit my parents and grandparents, they have ads on top of the shows they're watching—one show had, for the entire time, a countdown to another show (with occasional animations).

        reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 1 Sep 2020 @ 8:51am

    Deadweight loss

    This term is the cost of a monopoly. According to economic theory, society bears this cost. ATT is so incompetent that they are incurring this cost themselves.

    So how much are they going to have to pay someone to take Direct TV off their hands?

    reply to this | link to this | view in chronology ]

  • icon
    Norahc (profile), 1 Sep 2020 @ 12:00pm

    So how much are they going to have to pay someone to take Direct TV off their hands?

    I'd pay them a dollar to buy DirecTV...give ir take 98 cents.

    reply to this | link to this | view in chronology ]

  • icon
    ECA (profile), 1 Sep 2020 @ 12:25pm

    isnt it wonderful?

    How does a Capitalist system work?
    By competition, and Taking advantage of others.
    then get the Gov. to add favoritible Laws for you.
    What happens when a company goes bankrupt, and sells off everything, at Discount prices?
    When Banks and mortgages happen, the bank gets the property.
    Not if it can be sold. With/without the money that was supposed to be paid. A total loss. And all those concerned, seem to lose all DEBT.
    from the sale of the indebted, to another that incurs the debt, by their purchase.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 1 Sep 2020 @ 1:35pm

    Yeah, it's utterly weird how the tax cuts and constant subsidies (never mind rate hikes) must have paid for, or come close to paying for at least one of these mergers, and yet...

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 1 Sep 2020 @ 4:05pm

    Please, please, ATT&T dump DirecTV which might potentially screw scientology out of a channel to peddle their cult crap.

    reply to this | link to this | view in chronology ]

  • icon
    HiddenOkie (profile), 2 Sep 2020 @ 8:08am

    Such a Mess

    I was a DirecTV customer for two decades until AT&T got hold of it. I was a sucker and came back for AT&T TV, but as soon as I'm either in the clear or it's feasible to cancel the service, I fully intend to do so. They took a great company that provided, hands down, the best service in the TV market and completely messed it up. Now that they have the intellectual property and can run their own little side show, AT&T treats DirecTV like a dirty old hooker. They're done with it and done with its customers. Unless you want to pay well over twice as much for the same service, DirecTV is no longer a shadow of its former self.

    reply to this | link to this | view in chronology ]

  • icon
    pjcamp (profile), 2 Sep 2020 @ 9:01am

    AT&T turns everything it touches to sh(t

    I first subscribed to DirecTV in 2000, when I got angry at what was then Media One, now absorbed into Comcast. I was very happy with it for a long time. Service was good, technology was cutting edge. No reason to change since nothing else was cheaper.

    Then came AT&T.

    I used to use AT&T for internet until they imposed caps and overage charges. And when they bought DirecTV, customer service moved to an Asian call center where nobody knew anything, they just read scripts. The service itself, as well as the technology, began to lag the competition. And when AT&T announced there would never be another satellite launch, it was pretty clear they intended to force customers to there IPTV and streaming products.

    The only other option for traditional TV around here is Comcast, and I changed to them. I don't think streaming only is ready for prime time yet, at least not for me. It requires too many different services and is too hard to find content.

    I hate Comcast (used to use them for ISP as well). But they're better than DirecTV and that's saying something.

    reply to this | link to this | view in chronology ]

    • icon
      fairuse (profile), 3 Sep 2020 @ 5:43am

      Re: AT&T turns everything it touches to sh(t

      True.

      I went with Comcast years ago like wen Showtime had Ron Harris girls. Yeah, that long. At one time I had all that was offered. As the cool cable networks got bought up by broadcast networks I have reduced my bill.

      Comcast Internet: I spend $ for fast. Channels: no HBO, Cinemax, Starz, Showtime.

      Any special series or movie I have Amazon Prime Video and Netflix.. No Disney, CBS, others. WGNa now does deal that new series are blocked on Comcast but not on telcomm that makes wireless deal - See Almost Paradise on WGNa.

      Good bye to studios that made great series and movies because, He That Dies With The Most Toys Win.

      reply to this | link to this | view in chronology ]

  • icon
    fairuse (profile), 3 Sep 2020 @ 5:57am

    Streaming vs wire vs wireless vs broadcast

    Streams make me lose my mind if I am in a browser. Tablets are nice but a big screen is what it is all about.

    On mobile screen I just figure the ability to watch is handy. Streams get into a "wifi required" tangle depending on content.

    Comcast via "box" and Internet is darn good. However, there are changes on how rent/buy/free work. Can be painful. The cable is still the only quality screen because not TCP.

    The Amazon, Netflix, Xfinity stream quality never will be as good as compressed cable. From software DRM issues and network traffic to device issues Internet streams always have less quality.

    Do not get me started on how SD and HD are just marketing if you don't have hardware. Even you tube looks good on Amazon TV Stick, most of the time. Hardware!

    reply to this | link to this | view in chronology ]

    • icon
      nasch (profile), 3 Sep 2020 @ 9:01am

      Re: Streaming vs wire vs wireless vs broadcast

      The Amazon, Netflix, Xfinity stream quality never will be as good as compressed cable.

      You think 4K video over fiber is not going to look as good as a cable channel? Why?

      From software DRM issues

      I have seen that on one platform, I think Vudu. Never on any of the big ones, have you?

      and network traffic

      Depends on your connection. I don't even have fiber and I rarely if ever have any perceptible issues. Set up a gigabit connection and I doubt there would be any at all. Have you watched IP video on a fiber connection?

      to device issues

      Why would there be more device issues with IP video than cable?

      Internet streams always have less quality.

      I'm skeptical.

      reply to this | link to this | view in chronology ]

      • icon
        fairuse (profile), 3 Sep 2020 @ 1:05pm

        Re: Re: Streaming vs wire vs wireless vs broadcast

        I do have gigabit service. What I did not address clearly is the software sending the stream to the screen is more of a quality killer than hardware.

        Amazon Prime Video streams play via Fire Stick are perfect over my wifi. Same for Netflix - 4K untested.

        When stuck waiting for a task to complete I will use Chrome or Firefox, for example, to watch Netflix or Amazon - quality goes down. It makes me crazy because all the control for DRM is software.

        As for the cable feed - get what is delivered.

        Devices like tablets are solid unless wifi is hotel grade.

        No Fiber in this area, out in the woods but close enough to get gigabit.

        reply to this | link to this | view in chronology ]

      • icon
        fairuse (profile), 3 Sep 2020 @ 1:07pm

        Re: Re: Streaming vs wire vs wireless vs broadcast

        Forgot. I do not have 4K equipment. Just what is called 2k.

        reply to this | link to this | view in chronology ]


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