AT&T said the deal would strengthen its balance sheet and allow it to focus on the costly task of upgrading its wireless network with next-generation 5G technology. This update requires expensive investments in radio spectrum — it just spent $23.4 billion on bandwidth at the latest U.S. government auction — and AT&T also plans to dedicate more resources to fiber internet infrastructure and HBO Max. “I definitely believe we`re going to move to a streaming service,” the commissioner told CNBC of Sun Valley, Idaho. where he attended the Allen & Co. conference with a number of media and technology executives, many of whom are NFL rights holders. Goodell said he believes the terms of the deal will be finalized by the fall. He thinks regulators will be more supportive of a deal if DirecTV is under the joint venture rather than AT&T. After the WarnerMedia split, AT&T CEO John Stankey significantly transformed the company, which he acquired from former CEO Randall Stephenson, who led both major mergers to make AT&T a media giant. Stankey said the telecom company would return to its core competency and become “one of the best-capitalized broadband companies focused on investing in 5G and fiber to meet the significant and long-term demand for connectivity.” In its initial announcement after the spin-off, standalone company DirecTV said the new operational structure would work better than the one managed by AT&T. “This is a turning point for DirecTV as we return to a single goal of delivering an exceptional video experience,” said Bill Morrow, CEO of DirecTV.
(Morrow`s LinkedIn profile says he is “known for his global expertise in leading complex turnarounds and capital-intensive startups.”) However, he hoped Sling TV would bounce back after its platform and UI overhaul in the second half of 2021. It should be noted that DIRECTV has renewed its entire satellite fleet over the past five years. The initial lifetime of a satellite was estimated to be only about a decade, but DIRECTV managed to keep its fleet alive much, much longer. Eventually, satellites will run out of fuel and become useless, but it`s a safe bet that today`s DIRECTV satellites will work hard in the 2020s and possibly beyond. As reported earlier this year, when the company initially announced plans to divest itself of its troubled DirecTV business, AT&T will retain a 70% stake in the company, while TPG will take a 30% stake. The telecom giant said the deal, for which it received $7.1 billion in cash, would help it pay down its massive debt, with the company predicting it could stop the bleeding by the end of 2023. When you`re ready to upgrade (or return) to DIRECTV, call Signal Connect at 888-233-7563. Our team will take care of you! U.S. and Canadian subscribers to cable or satellite TV services fell by 27 million between 2010 and 2020 and by 6 million in 2020 alone, Digital TV Research said.
Recently, a number of new streaming services have emerged to compete with Netflix, including HBO Max, Disney+, and NBCUniversal`s Peacock. AT&T`s video business has lost 6.7 million customers over the past two years and gained 17.2 million subscribers by the end of 2020. “We don`t think the vMVPD [Virtual Multichannel Video Programming Distributor] segment will ever be the growth business it was originally supposed to be. he`s been walking on water for three years,” Moffett said in a research note. Cord cutters, especially those who focus on scripted entertainment rather than sports and news, shun SVOD, not vMVPDs. Abandoning declining businesses is a familiar strategy for phone companies, and companies that sell them often continue to struggle. The company has lost an average of 1.5 million TV customers per year since acquiring DirecTV. The acquisition in 2015 was poorly planned – just before years of frantic cable cuts – and this is reflected in DirecTV`s current valuation.
The TPG deal, in which the private equity firm acquires a 30% stake in the company, estimates AT&T`s pay-TV business at about $16 billion. As DirecTV returns to a standalone company, the satellite TV provider has the opportunity to make sweeping changes to its business — and perhaps move closer to a long-awaited merger with Dish Network Corp. But none of this will be easy. The company, which is starting a new life as a joint venture between Dallas-based AT&T Inc. and TPG, is expected to lose customers for years. And while a connection with Dish may improve his outlook, the antitrust hurdles can still be insurmountable. Dish Network president Charlie Ergen continues to see a merger of Dish and DirecTV as inevitable and believes a pairing is necessary if the two companies` pay-TV businesses are to survive. If I had to bet, I would say that both DIRECTV services will continue to exist for many years to come.
There will be people who want one and people who want the other. I suspect that over time they will become more and more similar and eventually reach the point where you can barely tell them apart. It will just be a question, do you want a satellite experience because your streaming experience isn`t that good, or do you want streaming because you can`t drill holes in walls. It`s a win-win situation. DirecTV`s value declined rapidly under AT&T`s leadership, with the company reporting an impairment charge of $15.5 billion in January 2021.