Did they actually expect DTV subscribers to move to other AT&T services?AT&T bought DIRECTV in 2015 for $49 billion with the hope that the satellite TV service would help attract new customers for other company businesses, such as its phone service. However, DIRECTV has lost more than six million subscribers since the deal and more defections are expected in the short and long-term. The effort to stem the satcaster’s losses has taken AT&T’s focus away from what it believes are more viable businesses now, such as streaming.
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.I wonder if TPG will invest in any new equipment? Maybe do one last DVR that does 4k HDR and outputs to HDMI 2.0 or 2.1? Unless they are just going to make AT&T TV better and forget about any DTV upgrades?
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.
DTV isn't profitable though. If it was AT&T would not be selling it.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...
DTV isn't profitable though. If it was AT&T would not be selling it.
AT&T over paid for it. The company was not worth that much.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.
Yes, something that many are forgetting, Subs were leaving D* before ATT took over ....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.
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.I think thier idea of moving everyone from D* to D* Now (if that truely was thier idea) had NO Chance of working.
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.
The entire industry collapsed...prices just got too high and the product just became more and more mediocre ( for satellite abd cable)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.