AT&T is exploring its options for selling DirecTV after spending $49 billion for buying the satellite TV company four years ago, The Wall Street Journal reported on Wednesday.
AT&T had purchased DirecTV in 2015 in a deal valued at $49 billion. AT&T decided to buy the DirecTV after it failed to buy T-Mobile US, the third largest mobile service provider, in three attempts.
At present, AT&T has 21.6 million premium TV subscribers and 1.3 million DIRECTV NOW subscribers. AT&T TV, the company’s new thin client video service, is expected to begin trials in the third quarter.
AT&T CEO Randall Stephenson, who is facing the music from investors for a series of huge investments, in May 2014 said the deal would create a national wireless, video and broadband-Internet powerhouse. The aim of AT&T was to bring valuable television content to any device for its consumers.
DirecTV’s future has been uncertain as pay-TV subscriptions have plateaued and consumers have clamored for TV programs and movies from online video providers such as Netflix and Amazon Prime.
The telecom giant has weighed several options, the Journal reported, including breaking off DirecTV into its own company and combining DirecTV with Dish Network. Reuters reported that AT&T and Dish Network are not in discussions over a deal, due to regulatory issues.
“There’s been some stories out there about the industrial logic about putting two satellite providers. It hasn’t been successful and I don’t know that there’s any change in that regulatory perspective. So understanding industrial logic, put quite frankly, it’s been tried and has been rejected,” AT&T CFO John Stephens said last week when asked about a combined DirecTV and Dish.
DirecTV has lost satellite TV subscribers with users shifting to cheaper online streaming services like Netflix and Amazon.com’s Prime service.
AT&T lost 778,000 premium TV subscribers, which includes DirecTV users in the second quarter, more than the 544,000 it lost in the prior quarter, and expects the video losses to continue in the current quarter.
Elliot Management, which owns $3.2 billion stake in AT&T, has recently demanded that AT&T should divest DirecTV business. AT&T purchased media company TimeWarner last year in a deal valued at $85 billion.
DirecTV, the satellite service, had 20.3 million US customers when AT&T purchased the business. AT&T’s own U-verse cable system had another 5.7 million. The total satellite TV business had 26 million subscribers.
AT&T’s total satellite TV subscriber base fell to a combined 21.6 million subscribers in the second quarter of this year, registering a 17 percent drop in four years, CNN reported.
