AT&T Is Sad Because Nobody Wants To Overpay For DirecTV
from the synergies,-yo dept
U.S. Telecom providers, as companies that have spent the better part of the last century as government-pampered monopolies, are adorable when they try to innovate or seriously compete in more normal, competitive markets. Verizon’s attempt to pivot from curmudgeonly old phone company to sexy new ad media darling, for example, has been a cavalcade of clumsy errors, missteps, and wasted money.
AT&T has seen similar issues. Under CEO Randall Stephenson, AT&T spent roughly $200 billion on mergers with DirecTV and Time Warner, hoping this would secure its ability to dominate the pay TV space through brute force. But the exact opposite happened. Saddled with so much debt from the deal, AT&T passed on annoying price hikes to its consumers. It also embraced a branding strategy so damn confusing — with so many different product names — it even confused its own employees.
As a result, AT&T lost 3,190,000 pay TV subscribers last year alone and roughly 7 million since 2017. Not exactly the kind of “domination” the company envisioned. Despite a $42 billion tax break from the Trump administration for literally doing less than nothing (42,000 layoffs, in fact), AT&T’s now being forced to consider low ball offers for DirecTV after investors finally got tired of the company’s merger-mania. It’s not going particularly well:
“AT&T?s attempt to unload ?DirecTV has been thrown into doubt, as the telecom giant has signaled it?s unhappy with the offers it has received for the struggling satellite TV service, The Post has learned…insiders tell The Post that AT&T ? dissatisfied with those offers ? has invited private equity giant TPG Capital to study the books in hopes that it will make a binding offer that props up the price.
Other participants include Apollo Global Management, which, according to sources, offered less than $15 billion including debt; and investing tycoon Michael Klein?s blank-check company Churchill Capital Corp. IV.
More to the point: AT&T paid $66 billion just five years ago for DirecTV, and now it can barely net $15 billion for the assets. Everybody from consumer advocates to Wall Street stock jocks thought it was stupid that AT&T bought a satellite TV provider on the eve of the cord cutting and streaming revolution. While AT&T did get to enjoy slightly less competition from traditional TV providers via the acquisition, it’s hard to argue the deal was anything other than a disastrous dud.
And while the acquisition may have proven stupid and pointless, the debt from both the DirecTV and Time Warner deals persists. And it’s not AT&T executives that have to pay for it. It’s the company’s consumers, who’ve faced a steady parade of rate hikes. And the company’s competitors, who face higher rates for content than ever. And it’s the company’s employees, 47,000 of whom have been fired since 2017 despite AT&T nabbing a $42 billion Trump tax cut and billions more in regulatory favors from the FCC.
Of course this was all spelled out very clearly by economists, consumer groups, and other experts, but the FCC, DOJ, and U.S. courts couldn’t have possibly cared less. Especially when it comes to the Time Warner merger, which saw absolutely zero conditions affixed to the deal. When we talk about the U.S. having flimsy and pathetic antitrust scrutiny and a relentless obsession with idiotic, “growth for growth’s sake” mergers, AT&T’s last five years remains exhibit A. instead of promised innovation, we got rate hikes and layoffs. And the next time AT&T proposes a merger, folks will pretend none of this ever happened.