AT&T's Attempt To Dominate The Pay TV Sector Continues To Go…Poorly
from the not-according-to-plan dept
AT&T’s attempt to buy its way to TV sector domination isn’t going so well. In 2015 you’ll recall that AT&T spent $67 billion to buy DirecTV, eliminating a direct competitor in the TV space. In 2018 it spent another $89 billion to acquire Time Warner, one of the biggest broadcasters in America. Both acquisitions were designed to propel AT&T toward supremacy in the TV sector. Neither acquisition is actually doing so. In fact, to recoup the massive debt incurred from both deals, AT&T started raising rates hand over fist despite the growing competitive threat posed by streaming video providers.
It’s not exactly going according to plan. AT&T’s latest earnings report (pdf) indicates that the company lost a whopping 4 million TV subscribers last year alone; not exactly the market domination AT&T envisioned:
Meanwhile AT&T’s fixed-line broadband subscriptions, generally seen as the backup plan for users who “cut the cord” on traditional television, also continue to slowly but steadily erode:
And things aren’t getting better for AT&T anytime soon.
Wall Street stock jocks are worried that the company is facing a large number of programming contract expirations this year, which will require that AT&T (read: AT&T customers) shell out even more money for the exact same programming. That’s before you get to the rising tide of competitors including Disney and Apple that intend to also try and dominate the sector by throwing money at it over the next few years. Profit margins are going to drop like a stone on TV, and AT&T, still saddled with some of the highest debt loads of any company on Earth, isn’t particularly well equipped for it, even with the FCC effectively in its pocket.
It’s a major reason why AT&T has been facing a bit of an investor revolt lately by “activist” investors who feel like AT&T’s obsession with mindless merger mania is actually harming the company’s attempts to gain inroads in the TV sector. AT&T hopes to rekindle some growth by adding yet another new streaming TV service to its already insanely confusing roster of video brands, but there’s no indication that the company’s path will get easier anytime soon.