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.

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Filed Under: competition, cord cutting, pay tv, tv
Companies: at&t, directv, time warner


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  • icon
    Samuel Abram (profile), 23 Dec 2020 @ 5:50am

    Just like Trump...

    AT&T is just like Trump in that they get tons of revenue (in AT&T's case, government subsidies; in Trump's case, Casino and Hotel revenue), and they still lose a bajillion dollars. Unlike Trump, though, at least AT&T has something decent to offer (I'm talking about HBO Max, which I love).

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

  • identicon
    Not THAT AC, 23 Dec 2020 @ 7:35am

    Trump does have something to offer ...

    Immense entertainment value for those of us not (directly) impacted. Edge of the seat "what's he done now" tension mixed with pure comedy moments.
    Literally unbelievable supporting cast is an added bonus.

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

    • icon
      Stephen T. Stone (profile), 23 Dec 2020 @ 7:48am

      If you think of the dereliction of duty from the Trump administration that led to the deaths of 300,000 people (and counting) as “entertaining”, you may want to reconsider your definition of the word.

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

      • identicon
        Not THAT AC, 23 Dec 2020 @ 7:54am

        Re:

        I'll give you that - though the per capita death rate is even higher here.

        "Compelling fascination" then.

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

      • identicon
        OGquaker, 23 Dec 2020 @ 11:24am

        Re: an x combat medic's view

        A large bulk of "entertaining" pap produced for Americans starts with death. Even the darling of the 2000's, 'Harry Potter', has a murder in the first 5 pages, as i remember. Whats 300,000 against the 400,000 American overdoses (16 a day in Ohio for a decade) of Afghanistan Opium protected by US troops?* Curtice LaMay's 101 burned cities, the immolation of every structure above the 38th parallel, or George Lucas's plantiside of Alderan? "TopGun" increased voluntary enlistment by 25%
        I once owned the best blood formula in Hollywood, and sold 30 gallons one month. Have you ever seen even one boot full of blood? That's Entertainment!®

        • ISIS cut production to zero by the time we invaded, Christmas of 2001. Mosul©, now a best selling video game this Christmas.

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

  • identicon
    Pixelation, 23 Dec 2020 @ 7:36am

    Say goodbye

    Hopefully the copyright industry...sorry, the entertainment industry is paying attention. This is what happens when you play hardball and push contracts with the delivery services that squeeze out every possible penny. If they're smart, they will renegotiate with AT&T to help bring the costs down. If AT&T is smart, they will spend some time and effort to figure out what people want and how to get it to them at a reasonable cost. Hints for AT&T... No hidden taxes or fees, just a monthly fee that doesn't change. No crappy contracts with a good price for a few months only to go through the roof after that. Most everyone does not want 500 channels. Give us a list of channels to choose from and price for each channel and let us choose how many we want. Give us a price for each channel with ads and without. Spend a little on great customer service with people whose first language is English. Good to have agents that speak other languages for those customers that don't speak English. Focus on what your customers want more than on your bottom line.

    Sigh A man can dream, right?

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

    • icon
      Code Monkey (profile), 23 Dec 2020 @ 5:37pm

      Re: Say goodbye

      Awww, it's just so ADORABLE when they have hope....

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

    • icon
      Code Monkey (profile), 23 Dec 2020 @ 5:42pm

      Re: Say goodbye

      ...however, you are totally right. An a la carte menu where I pay the SAME price per channel, regardless of how many or how few channels I choose to watch.

      That also might spur content providers, based on which channels get purchased the most (or, conversely, the ones that no one purchases...) to produce better content. I firmly believe people will pay a fair price for GOOD, QUALITY content.

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

  • identicon
    piss sprinkles, 23 Dec 2020 @ 8:27am

    2 tears in a bucket...

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

  • identicon
    Anonymous Coward, 23 Dec 2020 @ 10:46am

    Couldn't happen to a nicer set of dirtbags...

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

  • identicon
    Anonymous Coward, 23 Dec 2020 @ 2:12pm

    Broadcast TV is dead...

    Since streaming has been available, I'm no longer willing to be held to some schedule someone came up with to watch something... if I'm going to watch something, it's going to be on my schedule

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

  • identicon
    Anonymous Coward, 23 Dec 2020 @ 3:13pm

    All together now...1...2...3...aaawww...

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

  • icon
    mrtraver (profile), 23 Dec 2020 @ 5:55pm

    Quick! Raise rates again!

    That will make us more valuable so someone will pay more than $15 billion!

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


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