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AT&T sizes up its pay-TV legacy

Reports that AT&T wants to shed DirecTV are not new, but now is an excellent time for AT&T to simplify and clean up its stable of video distribution services.

Phil Harvey

August 28, 2020

3 Min Read
AT&T sizes up its pay-TV legacy

No matter what AT&T executives have publicly said about DirecTV in the past, the satellite service's days have been numbered. Earlier this year, when AT&T completed the nationwide launch of its AT&T TV streaming service, that may have marked a turning point when AT&T saw what the world looked like without traditional pay-TV.

Soon after the AT&T TV launch was the debut of HBO Max. With those two services, AT&T could provide all its entertainment properties nationwide, to dozens of different devices, over any provider's traditional cable, satellite or broadband networks. To consumers, the thought of nailing a satellite dish to the roof just for a dedicated, linear TV service suddenly seemed hopelessly outdated.

It's not surprising now that AT&T is, again, reportedly looking to separate itself from its pay-TV past.

"The telecom and media giant and its advisers at Goldman Sachs have been in talks with private-equity suitors about the satellite TV unit," The Wall Street Journal reported today, citing unnamed sources. "Potential bidders include Apollo Global Management, which had expressed interest last year, and Platinum Equity, these people said."

AT&T doesn't break out its performance for DirecTV as a separate unit and there's probably a good reason for that. "Unfortunately, it has become clear that AT&T acquired DirecTV at the absolute peak of the linear TV market," wrote Elliot Management, in a letter to AT&T's board of directors last year, right around the time there were reports of AT&T looking to divest itself of DirecTV.

In the last three months of 2019 and the first three months of 2020, AT&T lost a combined 2.19 million pay TV subscribers. It's unclear how many of those were DirecTV subscribers since the company also stopped selling its legacy U-verse pay-TV product in April.

Related: Light Reading's Jeff Baumgartner gives us the story behind the launch of AT&T's HBO Max.

The Light Reading Podcast · What's the story: Light Reading's Jeff Baumgartner on the momentum of HBO Max

As AT&T's pay-TV troubles added up, its streaming and pay-TV competitors were refining their products, improving their customer experience and finding their footing. In February, Google's YouTube TV, which first debuted in 2017, passed the 2 million subscriber mark.

In May, Fox Business reported that bankers were pressuring AT&T to do some kind of deal to get rid of DirecTV.

Likewise, Fox Business had also reported in late 2019 that private equity firm Apollo Global Management had proposed an AT&T restructuring and a possible combination of DirecTV and Dish Networks.

The point is the talks are back on and AT&T may be more motivated to rid itself of its legacy pay TV-businesses now. If it were to do so, the carrier would, for the first time ever, be on the path to providing a comprehensive set of pay-TV and premium TV services that truly complement its broadband, wireless and media businesses.

Phil Harvey, Editor-in-Chief, Light Reading

About the Author(s)

Phil Harvey

Editor-in-Chief, Light Reading

Phil Harvey has been a Light Reading writer and editor for more than 18 years combined. He began his second tour as the site's chief editor in April 2020.

His interest in speed and scale means he often covers optical networking and the foundational technologies powering the modern Internet.

Harvey covered networking, Internet infrastructure and dot-com mania in the late 90s for Silicon Valley magazines like UPSIDE and Red Herring before joining Light Reading (for the first time) in late 2000.

After moving to the Republic of Texas, Harvey spent eight years as a contributing tech writer for D CEO magazine, producing columns about tech advances in everything from supercomputing to cellphone recycling.

Harvey is an avid photographer and camera collector – if you accept that compulsive shopping and "collecting" are the same.

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