Investors press AT&T to sell TV assets – report


Reports are circulating in the telecommunications press pages suggesting that AT&T investors are pressuring new CEO John Stankey to sell assets in DirecTV.

According to Fox Business News, the “bankers” are pushing for the divestment of DirecTV to reduce the heavy debt weighing on financial spreadsheets. This isn’t the first time that there have been calls to sell interests in content units, but the phone company has held off so far, stressing the importance of streaming and entertainment in the mix of convergence.

While debt is something that will always be around in the corporate world (some see debt build-up as a measure of company ambition and market confidence), AT&T appears to be in a position which makes investors uncomfortable.

At present, AT&T currently has debt of $ 164.3 billion, of which $ 147.2 is considered long-term. Considering the liquidity absorption of the telecommunications industry, there will always be debt on the books at AT&T, but it is a company that has made very big bets on the world of content, which is successful. very questionable.

In July 2015, AT&T bought DirecTV for $ 67.1 billion, including assumed debt, and a year later announced it was acquiring Time Warner for a whopping $ 108.7 billion. . The company also owns a 2% stake in Canadian entertainment company Lionsgate, as well as several small bets. The goals are to add additional revenue streams to the AT&T business, attempt to sell convergence packages, and add greater resistance to macroeconomic trends and the path to commodification that the telecommunications industry is following. .

This is of course a courageous quest by the management team, dipping their fingers into additional pies to create a more diverse business, but one wonders how successful the team has been.

These are very big bets to be made, which go against the general consensus in the industry, with many rivals choosing to take a position of content aggregator, a safer but less profitable bet on the platform economy. . Of course, doing something different from the status quo isn’t necessarily a bad thing, it just has to work well.

The question is whether the phone company is good at running such a diverse and eclectic business; the evidence suggests this is not the case.

First, the content business unit is incredibly fragmented. We realize you need different brands to appeal to different demographics, but it’s pretty amazing at AT&T where you have DirecTV, DirecTV Now, U-verse, HBO Max, HBO Now, HBO Go, Watch TV, and DC Universe. It’s scattered, chaotic and superimposed.

Of course, none of this would matter if the unit grew and made money, which brings us to the second point. The division of content is costing AT&T a lot of money, while subscriptions are disappearing faster than toilet paper in the early days of the lockdown. In the last earnings call, AT&T executives had to somehow defend the loss of 1.03 million television subscribers.

Activist investor Elliott Management, who owns around 1.2% of AT&T, has already sparked a bad smell about the diversification strategy, although this is hardly surprising. This is a company that tries to force the divestiture of assets to increase the share price. This is a successful business model for Elliott Management, but it is questionable whether the long-term interests of the company are at the heart of the strategy. Forcing AT&T to sell content assets and focus only on connectivity isn’t necessarily a smart move in the long run.

CEO Stankey will see his resolve tested in the first few months of his tenure here. He has explicitly stated that the DirecTV business unit is not for sale, but that he will also be keenly aware of the dangers of resisting investor demands. After all, Stankey was made head of AT&T after Randall Stephenson was forced out under the guise of retirement. Daily Poll:

Should we re-evaluate the rules of confidentiality in the light of a new type of society?

  • User should have more choice to create their own privacy rights (41%, 95 votes)
  • Yes, the digital economy requires a different stance on privacy (31%, 72 votes)
  • No, the technology has changed but the privacy principles are the same (28%, 66 votes)

Total number of voters: 233

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