New AT&T 3.8 Billion investor seems to question DIRECTV and TW acquisitions.

Discussion in 'DIRECTV General Discussion' started by grover517, Sep 9, 2019.

  1. Sep 9, 2019 #1 of 45
    grover517

    grover517 AllStar

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  2. Sep 9, 2019 #2 of 45
    RAD

    RAD Well-Known Member

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    Dripping...
    POTUS is looking forward to this hoping that it will cause CNN to adjust their coverage,
     
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  3. Sep 9, 2019 #3 of 45
    James Long

    James Long Ready for Uplink! Staff Member Super Moderator DBSTalk Club

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    So what is the best case scenario for people who don't like AT&T ownership of DIRECTV? Spin off the profitable but subscriber count declining satellite service and keep the less profitable services? Spin off the entire entertainment unit?
     
  4. Sep 9, 2019 #4 of 45
    NashGuy

    NashGuy Active Member

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    I don't think there's any way that the (not-quite-even-born-yet) AT&T TV gets divorced from WarnerMedia/HBO Max. In fact, AT&T just made a move last week, I think, to put those services under the same division. And frankly, I can't see AT&T turning around and spinning off WarnerMedia after just acquiring it. They haven't even digested it yet, so Wall Street is still far from seeing what this new AT&T can do once it's got everything firing on all cylinders.

    I can see them somehow segregating DirecTV out from other parts of AT&T, though. It'll continue to be covered by the same network carriage contracts that undergird AT&T TV and it would still benefit from having WarnerMedia in the same corporate family, but I can imagine AT&T unlinking DirecTV from the main AT&T brand and perhaps even spinning it off into a separate subsidiary of AT&T. That would position them to completely sell DirecTV at some point in the future if they wanted to and found a willing buyer. Or, as I've hypothesized before, it might set them up to place DirecTV into a joint operating agreement with DISH for the purposes of installations, shared equipment, customer support and billing.
     
  5. Sep 9, 2019 #5 of 45
    slice1900

    slice1900 Well-Known Member

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    A $3.2 billion stake means he owns barely 1% of AT&T's shares. He'll make the press but unless he can convince 49% of other shareholders to go along with him, he can't force them to do anything. A lot of noise, but nothing will come of it.
     
  6. Sep 9, 2019 #6 of 45
    DirectMan

    DirectMan AllStar

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    ATT can spin off Directv to their shareholders that way they don't have to recognize the loss in value since they bought it. They would probably transfer a lot of debt to the books of DTV before the spinoff. Then they could do all the streaming efforts that they wish with no concerns about the impact on DTV. Much easier than a sale and faster no approvals needed from the government. The brainiacs at ATT would spin it as a great success.
     
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  7. Sep 9, 2019 #7 of 45
    lparsons21

    lparsons21 Hall Of Fame

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    Spin it off to who, or spin it off as a wholly owned subsidiary which would be more likely. I mean with declining subscriptions who would want to buy DirecTV? Unless it was a fire sale price.

    A smarter move might be to spin it and all the media related stuff to a wholly owned subsidiary or separate company with its own management team. Watching ATT flail about trying to figure out the future of it and TV is an effort in futility. So far I’ve seen no moves from them that indicate they have a clue about what they are doing or what direction they want to take.


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  8. Sep 9, 2019 #8 of 45
    DirectMan

    DirectMan AllStar

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    Spin it off to their shareholders. It would then be an independent company with the same shareholders initially as ATT. The process is like declaring a dividend, except in this case it is non taxable to their shareholders.
     
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  9. Sep 9, 2019 #9 of 45
    CraigerM

    CraigerM Well-Known Member

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    Wasn’t the point of buying DTV so they could have better channel negotiation rights and to do AT&T TV? If they spun off or sold DTV they wouldn’t have better channel negotiation rights with AT&T TV.
     
    Last edited: Sep 9, 2019
  10. NashGuy

    NashGuy Active Member

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    Yeah. But at this point (or very soon this fall), I think AT&T should have all their channel contracts finalized for a new set of channel packages to be sold to new sign-ups across DirecTV, AT&T TV and AT&T TV Now (and as add-ons to HBO Max come 2020). But how many years will those contracts remain in effect? And what impact, if any, would spinning off/selling DirecTV have on those contracts?

    That would be a key consideration, I think. AT&T isn't going to want to get rid of DirecTV if that means that their carriage rates for channels on AT&T TV suddenly skyrocket because their overall cable TV subscriber base gets cut by 75% overnight. I also think that AT&T had been planning to get the bulk of their DirecTV subs (the ones with home broadband service from any provider, but especially those with AT&T broadband) converted over to AT&T TV before selling off DirecTV.

    All of which is why it seems more likely to me that, in the short run, DirecTV just gets spun off from AT&T stock into its own separate stock that can be separately traded. For each share of AT&T stock you own, you get one share of the new DirecTV stock. The price of AT&T stock might take a hit at first, since a piece of the company's assets would be shifting over to the new stock. But then the market could price each business separately, based on appropriate metrics for a big media/tech company expecting future earnings growth (AT&T) vs. one that will continue to see a downward trend in earnings until it reaches a base of customers whose only choice is satellite TV (plus those who are loyal DirecTV subscribers and want to stick with it).

    The good thing for DirecTV subscribers, should such a scenario happen, is that the business would have to have a management team that's focused only on the satellite TV business and pleasing its customer base. In terms of customer support, maybe things would return to the pre-AT&T days.
     
  11. lparsons21

    lparsons21 Hall Of Fame

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    So adding to the screwing they gave to the consumer, now add some shareholder screwing to it? DirecTV and Dish are both in declining businesses, why would the shareholders want it?


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  12. NashGuy

    NashGuy Active Member

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    Unless AT&T can find a buyer for DirecTV, then AT&T shareholders are stuck with it anyhow (as part of the AT&T business, where news of big DirecTV subscriber losses each quarter negatively impacts AT&T's stock price). But at least if DirecTV was spun-out as a separate stock, which was given to all current AT&T shareholders, then the individual shareholders would have the option of selling their DirecTV stock on the open market. And such a move would also make things a bit simpler for a possible future merger with DISH (or, short of that, some kind of co-operating agreement).

    But even if AT&T were to spin off DirecTV soon as its own separate stock, I would expect DirecTV to somehow be under a binding arrangement to only sell AT&T-constructed channel packages with the pricing that they've set. Or maybe that kind of operational control would simply be achieved because AT&T itself would retain majority ownership in the new DirecTV stock, so all the board members and executives would be appointed by AT&T.
     
  13. slice1900

    slice1900 Well-Known Member

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    Maybe they could spin off Directv, Warner and the "AT&T TV" stuff into a separate media company, so AT&T can concentrate on its core competency which is cellular. The only reason to keep everything together is if they believe that bundling will make both more profitable.

    I wonder about that, since bundling is a good strategy for customer acquisition but not necessarily for maintaining profitable customer relationships in the long term. You are basically giving bundlers a discount for having both product, lowering the profit delivered by each. In order to make it worth it you need bundling to bring in enough additional customers to make up for the reduced profit per customer.

    The risk is that AT&T has been flailing about trying to integrate Directv and Warner into the overall AT&T operation, and they'd have to flail about undoing the integration to spin them off. A company that is perpetually trying to integrate or decouple various businesses isn't able to execute very many new strategies because so much of their overall effort is going toward that integration/decoupling that doesn't benefit the customer - and can be customer hostile as people getting converted from Directv to AT&T billing and losing some of the flexibility in the old system are seeing.
     
  14. Rich

    Rich DBSTalk Club DBSTalk Club

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    Hard to believe we can write something like this. I thought (pre-merger) D* had one of the worst customer service plans in existence and here we are with something far worse. Yes, that would be great.

    Rich
     
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  15. lparsons21

    lparsons21 Hall Of Fame

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    Yeah. It is funny to see when one or the other cable/sat provider gets #1 in customer satisfaction and then you notice:
    1. The difference between #1 and the rest is minuscule
    2. The ‘best’ of the ‘worst’ customer service isn’t really a big feather in one’s hat! Cable/sat always seems to be down in the dumps with the used car sales teams!

    That said, for all the complaining I used to do about Mediacom, they’ve either improved their customer service, or the product they are producing is working well enough you don’t have to deal with them!


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  16. CraigerM

    CraigerM Well-Known Member

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    What if AT&T TV doesn’t have enough subscribers by the time the channel contracts are due?
     
  17. DirectMan

    DirectMan AllStar

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    Understand that part of the rationale of the spinoff is to reduce debt. They would transfer some debt to the independent DTV. If they retained majority ownership (or even if they retained control with less say 20%) then they would have to consolidate the results and balance sheet of the new DTV with the remaining entity - in other words it would be a wash with the existing entity. In addition, a partial spin off might be taxable to shareholders. So if there is going to be a spin off, it will be 100% of DTV with say $20 billion of debt transferred to it.
     
  18. NashGuy

    NashGuy Active Member

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    Yeah, that's certainly a consideration. But I can't see AT&T losing at least certain aspects of control over DTV until they've gotten AT&T TV stood up to the point where they want it.

    Again, for one thing, if DTV were to spin off in, say, Q2 2020 and break loose from AT&T's carriage contracts (which also cover AT&T TV) and negotiate their own new set of contracts, channel packages, and prices just for DTV, then that would leave AT&T TV -- even together with the number of subs still grandfathered in on Uverse TV -- with WAY fewer subs. I have to think that that would either invalidate AT&T's new carriage contracts covering all their services or cause their rates to shoot up due to a dramatically lower total subscriber count.

    Beyond that, I'm sure AT&T will want to retain access to DTV's current, past and prospective customer contact lists for purposes of marketing AT&T TV and HBO Max.

    It's hard to imagine a truly independent, spun-off DTV ceding THAT much control to an outside company, AT&T, isn't it? Unless the spin-off was contractually obligated in the first place to those terms as part of a, say, 3-year agreement with AT&T during which the two cooperate and don't compete with each other. Then the race would be on for AT&T to try to shift as many subs over from DTV to AT&T TV or HBO Max as possible during that period.
     
  19. AngryManMLS

    AngryManMLS Active Member

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    What Trumpie needs to realize is that it's part of his job to deal with how the press covers him both good and bad. If he can't deal with that then honestly he should never have run for Presidency to begin with.
     
  20. NashGuy

    NashGuy Active Member

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    Too bad for AT&T, I guess. All the more incentive for them to build that AT&T TV subscriber base! (The easiest way, of course, it to contact all their current DTV customers and let them know that they can get pretty much their same channels, with a better receiver, for less money on AT&T TV, if that ends up being the case.)
     
    Last edited: Sep 9, 2019

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