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Discussion in 'DIRECTV General Discussion' started by CraigerM, May 20, 2020.
We are not going there with commentary.
MPEG2 trun off soon?
With the loss of DNS they may just get out being stuck in the contracts that held it up.
Well tbh I don't see AT&T getting rid of DirecTV completely when it accounts for the majority of its pay-TV subscriber base and they have stopped selling U-Verse TV and AT&T TV is still in its infancy. Estimators are put all of AT&T's pay-TV losses from Q1 under DirecTV because AT&T doesn't break out DirecTV, U-Verse TV and AT&T TV subscribers instead all three are lumped together as "Premium TV". I find it highly unlikely no one left U-Verse TV in Q1.
Also they have all their streaming services (AT&T TV, AT&T TV Now and AT&T Watch TV) housed under the DirecTV subsidiary and they are using DirecTV trademarks like Choice for AT&T TV and AT&T TV Now. The AT&T TV devices are using the proprietary power supply used for the Genie Minis and the AT&T TV devices themselves have copyright references to DirecTV.
Any sale of DirecTV will require AT&T to essentially "break up" the DirecTV subsidiary into two subsidiaries first. One exclusively for the satellite assets and one for the streaming assets. If you read the Terms and Services for all three streaming services the DirecTV, LLC. subsidiary is the part of AT&T legally responsible for those products.
This is exactly T's mistake. It really blows my mind. I am active on the forums and I couldn't tell you the difference between the 3 or why they even have 3. NashGuy knew all the differences, but that's one person. The general consumer has no clue.
Not to mention they take one look at the pricing and say "why should I pay $80+ when I can go to Netflix for $16?".
Monday / Tuesday is do or die for me with DirecTV. Either they re-up my promo or I walk. If they give me a one month credit like they did last month to "tide me over", I'll probably walk. Calling in once a year isn't a big deal. Calling in every month? Meh... and depending on how my promo lands (if I even get one), I still may walk.
I doubt it. The loss of DNS won't make any difference for oil rigs since I very much doubt they had it (they'd just use the spot beam for Biloxi or whatever is closest) Not sure it would even matter for the airlines - it wouldn't let AT&T cancel the contract, it probably wouldn't even allow the other side to cancel since DNS would be dropped because of the new law.
That's why I've always said it is unlikely to be sold - even as an asset of declining value it has a lot of value given its cash flow so who is going to pony up a minimum of $20 billion to make that happen?
It would make more sense for AT&T to spin it off as a separate company - typically you would spin off the debt associated with the original acquisition along with it.
I wouldn't be surprised if AT&T feels very different about the reason they bought it, and their plans for AT&T TV. I think if Directv goes, AT&T TV goes with it. Why do they need to have their own MVPD to serve their internet customers? The "bundle" is becoming less and less of a thing as people who don't watch sports drop traditional TV service altogether, I don't think AT&T needs it.
I hope the $1.335 billion is after they made their payment on the $49 billion acquisition cost, otherwise, you’re looking a pretty low return.
Although, if it is, you’re looking at about 2.7% quarterly return. They should have taken Warren Buffet’s advice and put it in a S&P500 ETF and saved a lot of people, especially their customers, some grief.
Isn’t that down like 33% from the 20+ million subscribers that they had, what, like three years ago? It seems like they’re losing leverage without selling.
As for someone looking to buy DirecTV, it would have to be at a big loss to T from what they bought it for. They’ve kept profits up by getting rid of less valuable customers. Unless they find some magic sauce that lets them start adding subscribers, profits are going to erode through customer attrition. It doesn’t take a lot of due diligence for mergers and acquisitions attorneys to figure out the trends. This is why they don’t sell.
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Bankers speculate on things like this all the time. It means nothing. Maybe they are thinking that this will drive up the stock price? Who knows? I can't see them selling until they know how successful their streaming services will be. If AT&T TV is a failure they might not be so keen on getting rid of this. We'll see, but I'll believe it when it comes from more sources than just one, Fox Business.
Regardless of whether the price they paid made sense, its value now as a separate piece being sold off is based on that profit and the debt they took out to acquire it is irrelevant.
I don't see the distinction between selling and spinning off other than packaging. A sale would also include assets and debt (unless the seller wanted to keep the debt?).
Spinning off would be selling to themselves instead of finding a buyer. Someone who owns X percentage of AT&T shares would end up with the same percentage of "Spinco" shares, with the ability to invest or divest "Spinco" shares after the spinoff completes. Then the noisy people who want AT&T out of the "Spinco" business could invest in the rest of AT&T.
But "Spinco" would need to be more than just the satellite service assets. The Entertainment Group is worth less (not worthless) without the satellite profits. Those pushing for a sale/spinoff seem to want to get rid of the Time Warner assets as well - so I expect "Spinco" to be more than the satellite assets.
It would be funny if AT&T did a spin off and the spin off did better than AT&T. Take that "bankers"!
Their investments are still making money. There will come a point where they will make more money selling the video services to a willing buyer than continuing to run the services. AT&T is not at that point.
Might help D if they brought back the service lol. A lot of folks on here seem to complain more about T service then the D service itself.
People on here seem to cancel out of T spite, so it probably would... but I bet if D gets spun off, they'll merge with Dish in short order. The problem T made in the first place was buying D. Seems obvious that merging all the systems at this scale is cost prohibitive and maintaining a bunch of separate systems is also a waste of money. A Dish/DirecTV merger would have the same issue.
The selling point of D used to be PQ. Now streaming is better PQ and the cost is cheaper if you have a lot of TVs.
The debt to acquire has to be paid off. Ideally it’s paid off using either income produced, or selling for a higher price. If not, it becomes a cash sink that pulls cash from other operations.
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Some people complain about how bad DIRECTV is post AT&T and forget that DIRECTV wasn't perfect. The market conditions that have affected AT&T|DIRECTV would have affected DIRECTV as a separate company, with the only difference being no people at AT&T looking at a quick ROI deciding to try to cut expenses by combining customer support, billing and installations and introducing a few policies I doubt DIRECTV would have done on their own. But AT&T bought DIRECTV at the peak of their subscribership - the declines since then cannot be 100% blamed on AT&T management (although it is fun to do so).
There is ego involved. Mr Ergen has wanted to own both companies since they were founded. Hopefully he remembers that DISH was not profitable until the year they took a huge loss paying costs when the first merger attempt fell through and won't make that mistake again. The better path would be to convince AT&T|DIRECTV customers to become DISH/SlingTV customers through their sales department instead of buying and needing to support separate satellite and billing systems. The better path is to do their best to beat AT&T|DIRECTV in the marketplace and only buy the system when the price is right and there won't be a huge loss. But ego may get in the way.
I don't see what T's end game is even. Internet biz is Fiber + POTS/DSL. In my "high tech city", a few never developments can get either T fiber or G fiber. Small percentage. My house was built in 2002 and T can only deliver me 100Mbps over POTS/DSL for $60/mo + $35 act fee + $10 equipment fee, so $70/mo BEFORE taxes for 100Mbps. I get Cox 1Gbps + phone for $117/mo. Oddly, T charges the same for 100Mbps as 1Gbps fiber. I'd switch to T for internet if they got fiber to my house. Cheaper then Cox 1Gbps.
So... they have no real path in internet...
Streaming they are blowing it too with all the different platforms and packages and nobody knows whats what and the pricing is terrible.
There's a HUGE distinction, because you don't have to find a buyer to spin it off, nor are there any regulatory concerns to delay the sale and risk depressing the value of a depreciating asset. A sale takes a lot longer, especially since the only interested parties would likely be their cable/satellite competition.
Such a sale will not include the seller's debt, the seller keeps the debt and the buyer takes out their own debt to finance it (or uses stock for all/part of it if the seller is willing to accept that)
Corporate debt is not assignable, AT&T can't take out debt in its name using its credit rating and then sell that debt off to whoever they want, anymore than you can take out a mortgage in your name using your credit rating and then sell your house along with the mortgage to me. If that was possible it would be easy to rid yourself of debt by "selling" it in a sham transaction to a shell company that immediately declares bankruptcy, or in the case of personal debt "selling" a house with a mortgage that's underwater to someone who is about to declare bankruptcy anyway.
If they spin it off they generally can't directly assign debt (unless you can get the debtholders to agree, and in AT&T's case they might since AT&T is carrying so much debt) but the investment bank that handles the spinoff would issue new debt in the name of the new company and use the proceeds to retire the old. As far as AT&T shareholders go they'd be issued shares in the new 'Directv' or whatever it was called, which could be bought/sold independently of their AT&T shares.
Or Gasparino has a solid source and ATT has been exploring a sale, if true they need to talk with bankers for a myriad of reasons, I don't follow Gasparino closely enough to know how good his reporting has been over the years.
If anything Directv is becoming more profitable for AT&T. They had their highest quarterly profit from their TV division ever last quarter - I'm guessing that just about all the integration costs have been paid at this point as well as the startup costs for AT&T TV.
The question is whether the level of profit it reaches meets their expectations, and at what point subscriber losses cut into profitability and at what rate. However like I said before I think the biggest factor as far as what AT&T may choose to do is whether AT&T TV is a success. So far it looks pretty meh, but they couldn't have picked worse timing for the launch if they had a time machine.
I know, I know, people will say "they need to lower their prices etc." but when content is 2/3 of Directv's price and has to be a higher percentage of AT&T TV's price since it is lower (because no $15 or $7 fees) there is not much room to price it lower and still make money.
On the other hand, they know HBO Max will be a gold mine since it is basically taking the HBO subscription many people with cable/satellite have been happily getting for years and bring it to streaming. I don't think AT&T TV serves a useful role for AT&T any longer, even if they can get millions of subscribers on board for it. The "bundle" of internet and TV matters less to consumers every year, in five years it will probably be gone altogether. Without that, they have no reason to be in the packaged TV business, not when they have one of the crown jewels of streaming in the form of HBO Max.
This Fiercevideo article says Apollo Managment day both DirecTV and Dish Network would be sold to Apollo Managment and and new SatelliteTV company would be formed.
AT&T under pressure again to sell DirecTV: report
“Apollo Management reportedly suggested creating a new company and having AT&T offload DirectTV to the new company. Then, Dish Network would sell its satellite business to the new company.“