'Activist' Investor Elliott Management Sells Stake In AT&T After Encouraging Mass Firings

from the employees-pick-up-the-tab dept

In AT&T executives' heads, the 2015, $67 billion acquisition of DirecTV and the 2018 $86 billion acquisition of Time Warner were supposed to be the cornerstones of the company's efforts to dominate video and online video advertising. Instead, the megadeals made AT&T possibly one of the most heavily indebted companies in the world. To recoup that debt, AT&T quickly ramped up its efforts to nickel-and-dime users at every opportunity, from bogus new wireless fees to price hikes on both its streaming and traditional video services.

This, in turn, wound up driving a customer exodus. In fact, AT&T has lost more than 8 million TV subscribers in just the last three years alone. Not exactly the kind of sector domination the company had in mind.

Last year, "activist" investors at Elliott Management began making a stink about AT&T's obsession with mindless merger mania. Not that it hurt consumers or misdirected funds away from network investment, mind you, just that the debt was dragging down the firm's $3.2 billion investment in AT&T stock. In response, AT&T forced its CEO to "retire," and the company, at Elliott's behest, greatly accelerated mass employee firings and customer service offshoring. AT&T's since fired more than 42,000 employees in just the last few years, despite a $42 billion Trump tax break AT&T promised would result in "thousands of new, high paying jobs," and billions more in regulator favors ranging from the death of broadband privacy rules to the dismantling of net neutrality.

Now it appears the moves were enough to give Elliott what it wanted. After raising a massive stink throughout much of 2019, the company this week quietly offloaded its entire stake in AT&T:

"The New York-based hedge fund liquidated its investment when it sold 5 million shares during the quarter that ended Sept. 30. It had first bought into the stock during the third quarter 2019, according to another filing."

Elliott wasn't entirely wrong. AT&T did fixate so much on merger mania it lost the forest for the trees and neglected its core focus: building and running networks. It also bungled its entry into the video streaming space with a befuddling array of different branding that confused even AT&T employees. It spent $150 billion to dominate a sector it's now barely making a dent in. Were I an investor, employee, or customer, I'd probably be pissed too.

The problem, of course, is that, as usual, it's the employees and consumers who actually pay the price for managerial incompetence. AT&T has a long history of cutting corners when it comes to network investment, then holding regulators and lawmakers hostage with empty promises that "X" (deregulation, merger approval, subsidies, tax breaks) will finally get AT&T to meaningfully invest into its own network. But these serious fiber upgrades never really happen because entrenched telecom monopolies, protected from accountability via regulatory capture, no competition, and their cozy relationships with U.S. intelligence, are, in effect, a perpetual, taxpayer subsidized con.

A con where, time and time and time again, executives and investors wind up somewhere sipping mojitos on a yacht, while customers and employees pick up the tab.

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Filed Under: activist investor, investor, layoffs, tax breaks
Companies: at&t, elliott management


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  • identicon
    Anonymous Coward, 19 Nov 2020 @ 6:41am

    A con where, time and time and time again, executives and investors wind up somewhere sipping mojitos on a yacht, while customers and employees pick up the tab.

    Love it or hate it, this is the core of capitalism.

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

  • identicon
    Anonymous Coward, 19 Nov 2020 @ 6:46am

    The article never really touches on why "activist" is always in quotes or why the moniker is even applied to Elliot Management. Maybe I just don't know the backstory but this is an odd thing to include in the article without explanation.

    As for their apparent "pump and dump" it's kinda hard to fault them for trying to recoup as much of their money as possible before dropping a bad stock like the turd it is. If there is blame to be laid here it is on AT&T's doorstep for their colossal fuck ups and inability to recover at all without resorting to further hamstringing their business.

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

    • identicon
      Rocky, 19 Nov 2020 @ 7:02am

      Re:

      Elliot Management usually invest in a company, then uses that investment in an effort to force the company to make changes, they then later sell off the investment. This is usually referred to as an 'activist investment' or 'activist shareholder'. A large percentage of the companies Elliot Management invests in are saddled with large debts which makes it easier for them exert influence.

      Hence, the activist moniker.

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

    • identicon
      Anonymous Coward, 19 Nov 2020 @ 3:29pm

      Re:

      The article never really touches on why "activist" is always in quotes or why the moniker is even applied to Elliot Management.

      1. That's how financial and market wonks refer to such behavior, which
      2. Is clearly detailed in the article.

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

  • icon
    Thad (profile), 19 Nov 2020 @ 7:10am

    They've really fucked Warner, too. There are some pretty smart people suggesting DC will probably stop publishing comics within two years.

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

    • icon
      Bloof (profile), 19 Nov 2020 @ 7:53am

      Re:

      'Hey, I've been looking at the books at WB and noticed we have this thing called DC that runs at a slight profit and is basically a source of free IP for TV projects, movies, toys, merchandise...'

      'A slight profit?'

      'Well, they have to pay people for art, writing, inking, royalties, but it pays off long term by giving us new stories, designs and characters to use.'

      'But we own all their old stuff, right?'

      'Well yes but what about the future...'

      'Fire them all, get them off the books so we can tell the shareholders we cut jobs to make them happy!'

      'But we need...'

      'Fire them all! It needs to look like we're doing things for the shareholders, future be damned! I'll be wrapped in a golden parachute by then!'

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

    • icon
      Bloof (profile), 19 Nov 2020 @ 8:25am

      Re:

      Sadly the writing was on the wall for DC as an entity when they closed the New York office and relocated everything to be closer to the movie people. The breathing space distance provided saved them from some of the interference they would have received under merger demented WB, but now they're just the people writing movie pitches who occasionally get sued by creators over rights.

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

  • identicon
    Pixelation, 19 Nov 2020 @ 7:53am

    I wonder if Elliott Management should be investigated? Could their actions border on, or be, illegal?

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

  • identicon
    Anonymous Coward, 19 Nov 2020 @ 3:26pm

    • It had first bought into the stock during the third quarter 2019, according to another filing." *

    Wait, what? This... doesn't even make any sense whatsoever.

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

  • identicon
    Tony, 19 Nov 2020 @ 4:35pm

    AT&T executives are soulless immoral assholes. They have been laying people off on a quarterly basis For a very long time. You can blame Elliott media all you like. At the end of the day, AT&T would still be firing people and raising prices. There are no human beings at the top. There are just soulless assholes. The world would be a better place if AT&T would just die quickly and quietly. That will never happen though. They will just offshore all the customer service they possibly can, Destroy beloved intellectual property along the way, make TV shit, make phone service a pain in the ass, and slowly die clinging to every last subscriber and charging early cancelation fees.

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

  • identicon
    Anonymous Coward, 20 Nov 2020 @ 7:17am

    In short this is an unfixable mess through legal means, a fair number of people in high places and a good deal of greedy overprivileged people need to die so the Zombie US telecom sector can get its head out of its ass. Sadly that's not happening in our lifetime.

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

  • icon
    nerdrage (profile), 20 Nov 2020 @ 4:16pm

    rats deserting the sinking ship

    Even Elliott has to concede defeat. AT&T is too screwed up for them to stick around. Time Warner/HBO will be run into the ground and AT&T will sell it at a steep loss to Apple or Amazon. Or maybe Netflix, that would be hilarious.

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


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