AT&T Explores Selling Underperforming DirecTV Business As Cord Cutters Rule

DirecTV Satellite Dish
Streaming services like Netflix and Hulu are taking their toll on traditional TV subscription offerings, and now more than ever, consumers are cutting the cord in search of cheaper ways to be entertained. Ubiquitous broadband has made this a viable option for many people. It also could lead to AT&T selling off DirecTV, though nothing is imminent.

This would be a curious shift in strategy for AT&T, which acquired DirecTV only four years ago for $49 billion. At the time, AT&T chairman and CEO Randall Stephenson said the purchase made AT&T a "fundamentally different company with a diversified set of capabilities and businesses that set us apart from the competition."

"We’ll now be able to meet consumers’ future entertainment preferences, whether they want traditional TV service with premier programming, their favorite content on a mobile device, or video streamed over the Internet to any screen," Stephenson said at the time.

Now just a few years later, people familiar with the matter say AT&T is exploring the idea of getting rid of DirecTV, according to The Wall Street Journal. This would mark a significant pivot for a company that just a short time ago viewed the acquisition as a key cog in its machine.

An outright sale of DirecTV is one possibility, though it is not the only one. Apparently AT&T is also considering a spinoff of its satellite TV service, in a deal that would be tied to rival Dish Network. Those details would have to be hammered out, of course.

AT&T might also decide it ultimately makes the most sense to keep DirecTV, even consumers continue to ditch satellite and cable TV services. It's a tough spot for AT&T—the company lost nearly 1 million DirecTV subscribers in the second quarter of 2019, which the accompany attributed to price increase, competition, and other factors. In addition, it lost 168,00 subscribers to its streaming DirecTV Now service.

Competition will only get stiffer in the coming months. Apple is getting ready to launch its Apple TV+ subscription service this fall, and likewise Disney has a streaming service in the wings as well. So does NBCUniversal, which is launching its weirdly named Peacock service next year.
Tags:  DirecTV, (NYSE:T), at&t