AT&T disappointed with offers for struggling DirecTV
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I would not be shocked if they cripple the service and then shut it down. Sell the customer data and what ever good technology there is.
Well this basically explains the faulty leadership there.
Did they actually expect DTV subscribers to move to other AT&T services?
Yeah, it'll be interesting to see if the new management does anything to improve DirecTV (like a new generation of DVRs) or if the plan is just to cut costs and eek out greater profitability as subscriber numbers continue to dwindle.
Whatever the plan, we probably won't see it put in place until end of this year at the earliest, as the deal probably doesn't close until this summer or later and it will take some time for the new team to implement any changes.
How does that benefit TPG? 30% ownership means Directv will be generating over $1 billion in free cash flow per year on a $1.8 billion investment. That sounds like a pretty good deal to me.
Honestly, some people just have no business sense, thinking that a profitable company will be shut down just because it promises to have a declining market rather than rising growth prospects. The future of gasoline/diesel powered vehicles is pretty dim in the long term as well, but that doesn't mean GM should shut down next year and cede the market to Tesla!
Anyway, this deal is slanted so much more in favor of TPG than AT&T (who actually will INCREASE their debt ratio from 4.1 to 4.2...so much for this deal helping there) that some analysts have been openly wondering why AT&T did it at all.
The only things I can think of are 1) allows them a huge writeoff on losses from the Directv acquisition since it sets a hard value on the asset versus what "mark to market" would allow and/or 2) there's something hidden in the terms more advantageous to AT&T than what has so far been made public. I foresee a big tax refund coming AT&T's way...
Yes it is, it is still VERY profitable. It generated over $4 billion in free cash flow every single year AT&T has owned, except last year when it dipped down in the mid $3 billion range.
AT&T would not have paid $49 billion for a company that didn't generate a profit. Between the cash flow and savings on rights for Uverse TV they've probably pulled around $25 billion in profit out of it since they bought it.
They overpaid in that it was expected to help them grow revenue, not shrink it. It is a big black eye on the balance sheet, which investors don't like to see. Like with many things on Wall Street, it doesn't necessarily make sense outside of the bubble (pun intended) of lower Manhattan. Of course, it probably didn't make sense to buy DirecTV outside of the that bubble at the time either.
Yes, something that many are forgetting, Subs were leaving D* before ATT took over ....
ATT in my opinion never tried to Improve the company as a whole at all, they just wanted it for the buying power of the current subs, which I think did not end up working as well as they had hoped.
They have changed thier streaming ideas what, 5 times now with different things that didn't work, now they are finally hanging with HBO MAX, hoping that, that survives.
I think thier idea of moving everyone from D* to D* Now (if that truely was thier idea) had NO Chance of working.
They were never going to get all DTV subs to switch to AT&T TV (and I don't think they believed they could) but they could still get a good chunk of them to move over if they take the right steps. I've already seen posts from longtime DTV subs who've made the switch to AT&T TV and are happy with it. Obviously, they were never going to get folks without home broadband to switch over (which is why AT&T admitted a while back that the target market for DTV going forward would shift to mainly rural homes without broadband). And as long as NFL Sunday Ticket remains exclusive to DTV, that will keep some folks there. And some folks just hate change, so they'll stick with what they have until it simply stops working.
But if they made just a few improvements to AT&T TV -- and nothing that's even technically challenging, just stuff like extending the cloud DVR retention from 90 days to 1 year, adding PBS locals, adding the same 4K HDR content DTV has, etc. -- then there really wouldn't be any significant ways in which DTV was better. Meanwhile, AT&T TV already has various ways that it's superior to DTV (unlimited DVR storage, no tuner conflicts, better equipment with streaming apps and Google Assistant on board, option to save money by using your own streaming devices instead, ability to access the full service on any screen in or out of home). As far as HD picture quality, the consensus seems to be that it's a tie.
But just making AT&T TV a little better than DTV wouldn't be enough to get all that many longtime DTV subs to switch. It would need to cost less too. And the regular pricing for AT&T TV is a little less than it is for DTV. And the more TVs you have and the bigger your channel package is, the greater the cost savings. But lots of DTV subs get loyalty discounts that take significant amounts -- $50 or more -- off their bill for an extended period. The only way those folks would likely switch would be if AT&T offered to transfer those discounts to AT&T TV or if they just did away with all those discounts and charged everyone the regular price.
Then when someone called in to complain about their DTV bill, they'd just offer to switch them to the same package on AT&T TV for a little less. "You'll get a better service and pay less each month" would be the sales pitch. They might even incentivize longtime DTV customers to switch over by offering them free AT&T TV boxes, which normally sale for $120 each, or $5/mo spread out over your first 24 months.
All that said, who knows at this point what they're thinking is in terms of hoping to shift any DTV subs over to AT&T TV. If they have things priced so that an existing sub on DTV (post-contract, after the cost of installation has been recouped) is just as profitable as a new one on AT&T TV, then maybe they don't care if they stick with DTV.
The numbers were stable or even growing when AT&T bought them. It wasn't until a couple years after the acquisition that they started seeing regular declines.
The entire industry collapsed...prices just got too high and the product just became more and more mediocre ( for satellite abd cable)
The greed of ever escalating prices (especially for locals - my locals are now around $22/month after yet another bump a couple months ago) did it in. People don't like seeing 5-7% price increases every year when their wages are going up a fraction of that. Cable/satellite is probably twice as expensive as it was in the mid/late 2000s in real terms.
Yep. And most of the problem can be laid at the feet of increasingly expensive sports contracts driving up the cost of cable TV, including the major broadcast nets.
Dish dropped sports without any price adjustment...its not all sports
