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AT&T Again Exploring a Deal For DirecTV—Update—Sale Pending

44K views 653 replies 66 participants last post by  Delroy E Walleye 
#1 ·
#334 ·
The NY Post has dropped another article about the AT&T "auction" of DIRECTV. Now they say that AT&T and/or DISH has received a warning shot across their bow from the DOJ that a merger still isn't an option.

I predict that what's left of DIRECTV is eventually going to end up with DISH (since no other company has the synergies) so why drag it out? I can't imagine that delaying it is going to add measurable impetus to wireless service coverage expansion to make an appreciable difference.
 
#335 ·
Yeah. Here's the same info, different source:
DOJ Wants DirecTV & Dish Merger To Wait: Sources

I agree with you (and Charlie Ergen) that DTV and DISH will inevitably merge or combine operations at some point. But I can understand the DOJ's reluctance to sign off on it yet, as it would eliminate too much competition and probably result in higher TV prices for rural customers right now. Couple years from now may be different after a full rollout of Starlink plus more fixed wireless home internet from T-Mo, Verizon and AT&T.

Sounds like AT&T doesn't want to wait that long to divest it, though. So DTV will probably end up in some sort of limbo status for awhile until it ultimately joins DISH in the DBS nursing home.
 
#345 ·
There would be little benefit cost wise from such a merger. Sure, billing/management could be combined which saves a little money, and call centers could be combined if they train everyone on both systems.

There would be no savings as far as satellites go, Dish would still need to launch replacement satellites when needed (Directv is good through about 2030 or so) because it would cost far more to replace everyone's Dish dish with a Directv dish. Since neither really has any reason to introduce new equipment beyond minor updates dictated by component obsolescence, it might not even make sense to merge the hardware lines.

The main reason why Dish and Directv would want to merge would be to increase revenue per customer, not by saving money. Not necessarily by raising prices, but by eliminating promotions where you start out with lower prices, get free installs, etc. They both probably realize that they're going to become niche in cities where people can get better prices with a cable TV double play, or go streaming only, so if they didn't need to compete against each other for the rural customers that still need them that's how they justify a merger financially.
 
#349 ·
The main reason I think would be larger customer base for bargaining with the networks more than anything. And to bundle if dish ever gets their cell service off the ground that would increase their chances of growing that business.

But att may be proof that doesn't matter to much. Not sure.
 
#346 ·
I think a best of both service could do pretty well as long as they didn't push for a >$150 ARPU like DIRECTV seems to be gunning for. They may also have more clout with content providers and taxing jurisdictions if they suddenly became one of the largest MVPDs. I think one of the big reasons that the old school model has suffered is that DIRECTV has shown a distinct lack of backbone in fighting for what's good for all.
 
#347 ·
I look at SiriusXM as the model for a satellite TV merger. One subscribes to SiriusXM but gets a slightly different lineup depending on if one is using Sirius or XM based equipment. They continue to maintain two separate satellite systems. There are few radios that get both systems.

I don't see a lot of savings at the CSR or install level - one still has to have X number of CSRs per Y customers - unless one just ruins the CSR experience (and AT&T can do that without a merger). There would be some savings from the people who flip back and forth between DISH and DIRECTV - they would no longer need to install and reinstall for those customers. In a good world they would size management based on the size of their workforce - but that is another area where they could easily cut managers without merging and just make the company worse in the process. Top management could be reduced.

I agree that "increasing revenue" would be the target - even though there would be some cost savings. It would be nice if they just had a competitive price for all subscribers instead of monster discounts for some and less for others. One of the things that allows for monster discounts from DIRECTV is NFL Sunday Ticket. Commercial account income and a flat rate paid to the NFL make that an easy giveaway. When DIRECTV loses NFL Sunday Ticket I expect the gravy train will end for the subscribers getting monster discounts.

In a few years the DOJ won't care if 10 million total satellite customers are served by one company or two. Just like they ceased to care about SiriusXM.
 
#348 ·
I don't see a lot of savings at the CSR or install level - one still has to have X number of CSRs per Y customers - unless one just ruins the CSR experience (and AT&T can do that without a merger). There would be some savings from the people who flip back and forth between DISH and DIRECTV - they would no longer need to install and reinstall for those customers.
Nobody says they must keep both hardware models. They could move the programming to one platform or the other. DISH's Hopper system with the addition of some of the DIRECTV patents could be pretty tasty.

Not having a unified hardware model is still a confounding element of the combined SiriusXM operation (one of the issues that has annoyed customers and regulators from the very beginning).

This would eventually reduce the breadth of support coverage as well has the repair and installation side of things.

Not having to do battle with the other guys will also allow the combined operation to make a better focused effort on the remaining competition (while painting a bigger target on their own back).
 
#378 ·
Not unless SpaceX gets in to the DBS service marketplace (transmitting content from uplinks to customers - not bi-directional transmissions).

There have been five companies who have ever successfully launched a DBS service in the US. Two of them (USSB and SkyAngel) launched with the cooperation of other services (DIRECTV and DISH, respectively) who eventually took over their partner's licenses. Primestar was not a DBS licensed service but was taken over by DIRECTV. Voom (Cablevision) was the last attempt to launch a DBS licensed service and it collapsed and sold its satellite and licenses to DISH. Orby is not a DBS licensed service. There were several other companies who were assigned DBS licenses that either folded or sold their licenses to DIRECTV or DISH without building anything.

Satellites are specific to service. Most newer DBS satellites were designed for one company's service. They may be able to be used at another orbital slot with less than optimal coverage to that company's service area. Use outside of that company's service area would be minimal. Some newer DBS satellites have non-DBS transponders for separate services. In those cases the non-DBS transponders can be owned by another company.

Think of it as owning an AM radio transmitter. Such a transmitter isn't going to be able to be used for anything other than AM service. At least an AM transmitter on Earth has scrap metal value. (And there are a lot more than two AM stations in the world where that transmitter could be reused. Not possible for DBS satellites designed for US coverage.)
 
#380 ·
This whole discussion leads me back to the thought that this is a dying industry. There may be a limited number of people that are so remote that satellite is the only way for them to get TV or other communication services. But, are they enough to support an industry?

Everyone else has other options that are far more flexible and typically lower priced. People are dropping satellite service. Dish and DirecTV lost about a combined 3.5 million customers last year.

The interesting part of this is that there are still currently somewhere around 25 million combined Dish and DirecTV subscribers. That’s about 1/5 of the total number of households in the US. Assuming average monthly bill of $100, that’s $30 billion per year in revenue.

But, at current subscriber loss rate, they will lose all those subscribers within 7 or 8 years.


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#381 ·
There may be a limited number of people that are so remote that satellite is the only way for them to get TV or other communication services. But, are they enough to support an industry?
Not an industry, but certainly a segment of the MVPD marketplace.
Everyone else has other options that are far more flexible and typically lower priced. People are dropping satellite service. Dish and DirecTV lost about a combined 3.5 million customers last year.
DIRECTV drew their quarterly average significantly below 1 million lost with today's announcement of only 590,000 lost in Q3.
Assuming average monthly bill of $100, that's $30 billion per year in revenue.
The actual revenue is around $37.5 billion. While DISH's DBS ARPU is over $100, DIRECTV's ARPU is considerably higher.
But, at current subscriber loss rate, they will lose all those subscribers within 7 or 8 years.
While Q3 is usually one of the better quarters, DIRECTV has decidedly decreased their net subscriber losses and I expect that DISH's DBS losses will also diminish (they may even post a gain). While DIRECTV is sloughing off customers at around 17-20% rate per year, DISH DBS is evaporating in the mid single digits annually.
 
#386 ·
The subscriber losses of around 600K was net of ATT TV signups and D* losses. I am sure they will lose a big portion of the ATT TV subscribers when they receive their bills for year 2. Probably D* lost around 900K subscribers this quarter just like last quarter but was offset by 300K ATT TV signups.
 
#388 ·
You seem to be complaining about DIRECTV more than most DIRECTV subscribers. :)
The people with the older receivers are happy.
 
#404 ·
If they sell a minority stake that means they would still run them. Basically they'd sell off a share of the profits in exchange for cash up front to reduce some of their huge debt load.
 
#405 ·
Not necessarily. It all depends on exactly what the minority stake terms are and no one that would actually know has come forward, and I doubt the ever will before the deal is done.
 
#412 ·
What will happen, will happen and not to concerned about it, but I guess, makes for talk.
The "nuke 'em all and let God sort it out" approach to reducing stress may reduce stress now, but it may cause much more distress down the road if one is wholly unprepared for the eventuality that a partner is found.
 
#415 ·
What looks good on paper or in older reviews may no longer be what it appears. YouTube has purged a handful of channels that once seemed important (and may be important post-COVID)
 
#416 ·
Well, reviewing the u Tube channel list last week, it is complete for us. If the time comes, the channel list will be reviewed again. Not to worry my friend. It is missing one local other Fox station that we get the Packers. That might be an issue.
 
#418 ·
Yes, and that is what we'll have to do. Early this year, they completed the transmission tower in Madison, WI. for all the TV stations. It is centrally located. We are about 40 miles away.
 
#420 ·
"AT&T is now negotiating exclusively with equity firm TPG to purchase a minority or majority stake in DIRECTV, according to reports from Reuters and Bloomberg."

The "source" is other media ...
Exclusive: Buyout firm TPG in lead for stake in AT&T's DirecTV - sources
(Reuters) - Private equity firm TPG has entered into exclusive talks to acquire a minority stake in AT&T Inc's satellite TV division, DirecTV, in a deal that would allow the U.S. wireless carrier to trim its net debt of close to $150 billion, people familiar with the matter said on Friday.

The exact price TPG is willing to pay could not be learned, but sources said the deal could value DirecTV at more than $15 billion. Were the negotiations to conclude successfully, a deal could be announced in the coming weeks, added the sources, who requested anonymity because the matter is confidential.

Bloomberg: AT&T Holds Exclusive Talks to Sell DirecTV Stake to TPG
AT&T Inc. is holding exclusive talks to sell a significant stake in DirecTV to private equity firm TPG, the latest stage of a monthslong push to unload at least part of the struggling pay-TV business, according to a person familiar with the matter.

So Reuters has "people" and Bloomberg has "a person". Yes, it could all still fall apart instead of fall together.

(Funny note: Bloomberg updated their article with responses from both companies - potential buyer and seller. Their update was "Representatives for AT&T and TPG declined to comment." :) )
 
#423 ·
Placing the evaluation of DIRECTV as a whole around $15 billion is worse than I thought (if anywhere near true). This makes me wonder if the prior "deals" were for upwards of $15 billion all in (debt included) for half the division and who knows what other of AT&T's premium TV services.

Given that a new name pops up every now and again, I'm not optimistic about a quick resolution to the auction.
 
#424 ·
What AT&T is attempting to do reminds me a lot of what Verizon did when they sold off large swaths of their legacy wireline telephone business to companies like Frontier and Hawaiian Telecom.

Verizon made out like a bandit -- saddling Frontier with a ton of debt and IIRC, somehow was able to write off much of the tax liability that stemmed from this transaction through fancy accounting tricks.

I don't want to see DirecTV fail. I think they have a market for their service, particularly in rural areas. However, I fear whoever decides to acquire them from AT&T will be looking to extract whatever they can out of the remaining assets, rendering the customer experience as bad (or worse) than it currently is with AT&T.
 
#425 ·
I'm shocked ... numbers reflecting AT&T's video operation separated from the rest of the group.
(AT&T Entertainment Group is now the AT&T Communications Group.)
Rectangle Font Parallel Screenshot Number


For 2020 video made $1.7 billion on $28.6 billion in revenue.
6.0% Operating Income Margin. 4th Quarter, not so hot (but a LOT better that 4Q 2019).

How can a company clear $2 billion in 2019 but only $39 million in 4Q then repeat the pattern and clear $1.7 billion in 2020 but only 98 million in 4Q?
 
#426 ·
How can a company clear $2 billion in 2019 but only $39 million in 4Q then repeat the pattern and clear $1.7 billion in 2020 but only 98 million in 4Q?
Creative bookkeeping?

Businesses with capital equipment often invest heavily before year-end. I can't imagine how that applies here. Maybe they set aside some retention funds.
 
#427 ·
I'm moving from an apartment (Directv unavailable) to a new house in a month or two. I've been with AT&T TV since last year. The first year was dirt cheap, the second year the price basically doubles.

It will be very interesting (in light of some of the theories above on AT&T wanting to keep Directv subscribers for a potential sale) as to how they work with me if I tell them I want to go back to Directv.
 
#428 ·
It will be very interesting (in light of some of the theories above on AT&T wanting to keep Directv subscribers for a potential sale) as to how they work with me if I tell them I want to go back to Directv.
That's something only AT&T can tell you.

I'd guess that they would graciously accept your $15/month ETF and bring you onboard as a new subscriber with an AT&T DIRECTV account, all the attendant benefits that go with being a newb and a fresh 24 month commitment with a $20/month escape clause. Again, only AT&T can tell you how they are going to treat you.
 
#429 ·
It would certainly be easier to move a customer to AT&T TV if the customer can self install than to move a customer from AT&T TV to DIRECTV (where a professional install is required). There is a report of AT&T waiving the DIRECTV ETF for a customer who moved to AT&T TV. If AT&T allows the reverse move please report back.
 
#431 · (Edited)
It's weird how all the highly paid geniuses at AT&T can't figure out a way to attract and retain more customers. You would have to conclude that they are unimaginative clods who should have never touched DTV in the first place.

Management was just trying to buy instant growth to goose up the stock price. The CEO has since left and collected his diamond platinum golden parachute, while stockholders paid the price.
 
#433 ·
It's weird how all the highly paid geniuses at AT&T can't figure out a way to attract and retain more customers. You would have to conclude that they are unimaginative clods who should have never touched DTV in the first place.

Management was just trying to buy instant growth to goose up the stock price. The CEO has since left and collected his diamond platinum golden parachute, while stockholders paid the price.
They and other cable TV providers shifted their focus to optimizing the amount of revenue per subscriber. I haven't seen the full numbers, but I'd surmise that as subscribers have fallen off, the revenue per subscriber has gone up. There will likely be more churn with the current industry turmoil and upheaval, so that optimal number will keep changing.
 
#434 ·
Their revenue per subscriber went up most quarters when they were adding net customers too. :)

AT&T Average revenue per subscriber for the past two years by quarter:
$114.98, $117.49, $121.35, $131.00, $126.27, $124.98, $130.55, $137.64
A little drop in the first two quarters last year (I am assuming from commercial businesses reducing services due to the pandemic).
Not too big of an increase from the $109.93 DIRECTV satellite posted in 2015.
 
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