AT&T might sell DirecTV after all – report

DirecTV logo
As video subscribers leave AT&T in droves, the company’s video entertainment revenues only dipped slightly, down 1.7% to $8.03 billion in the second quarter. (DirecTV)

AT&T may be considering a sale of DirecTV, its struggling satellite provider, despite indications to the contrary. But, the likelihood of a sale depends on whom you ask.

According to the Wall Street Journal, the company is exploring a divestiture. It has looked at potentially spinning off DirecTV into a separate public company, or potentially selling the company’s assets to rival satellite distributor Dish Network.

But, according to CNBC’s David Faber, AT&T is not actively considering a sale of DirecTV.

FREE DAILY NEWSLETTER

Like this story? Subscribe to FierceVideo!

The Video industry is an ever-changing world where big ideas come along daily. Cable, Media and Entertainment, Telco, and Tech companies rely on FierceVideo for the latest news, trends, and analysis on video creation and distribution, OTT delivery technologies, content licensing, and advertising strategies. Sign up today to get news and updates delivered to your inbox and read on the go.

The conflicting reports are bubbling up in the wake of a letter investment fund Elliott Management last week sent to AT&T. Elliott – which has taken a $3.2 billion stake in AT&T – called on the company to divest certain assets including DirecTV, which has lost millions of subscribers in the years since AT&T acquired it for $67 billion.

“In fact, trends are continuing to erode, with AT&T’s premium TV subscribers in rapid decline as the industry, particularly satellite, struggles mightily,” the fund wrote in a press release. “Unfortunately, it has become clear that AT&T acquired DirecTV at the absolute peak of the linear TV market.”

RELATED: Deeper Dive—Who would buy DirecTV?

As the Journal points out, regulatory approval for a sale of DirecTV to Dish Network could be a difficult task. Previous attempts to merge satellite providers in the U.S. have been blocked on antitrust grounds and more recently the U.S. Justice Department tried to force AT&T to sell DirecTV as a condition of its $85 billion acquisition of Time Warner.

DirecTV is clearly bearing the brunt of cord cutting trends in the U.S. pay TV industry. AT&T lost 778,000 traditional video subscribers (along with 168,000 DirecTV Now subscribers) in the second quarter. CFO John Stephens said his company’s tactics in ongoing content negotiations could result in an incremental 300,000 to 350,000 premium video losses, meaning third-quarter subscriber losses could push well past one million.

But, as video subscribers leave AT&T in droves, the company’s video entertainment revenues only dipped slightly, down 1.7% to $8.03 billion in the second quarter. The company’s overall entertainment group revenues fell just 1% year over year and operating income rose 2.6% to approximately $1.5 billion.

Suggested Articles

Hulu with Live TV will raise the price of its base package by $10, bringing the cost up to $54.99 per month. The price change will kick in on Dec. 18.

As AT&T TV Now falls back in the pack, Sling TV and Hulu with Live TV have emerged as the co-leaders among virtual MVPDs in terms of subscribers.

Verizon's Stream TV device, for now, doesn't support Netflix.