DirecTV, the pay-TV operator spun out of AT&T in 2021, told employees that it had moved forward with a layoff that impacts roughly 10% of the company's managers, according to a person familiar with the situation.

CNBC, the first to report the news, said the layoff affects "hundreds of employees" as the operator seeks ways to reduce costs. CNBC said managers comprise roughly half of a DirecTV employee base numbering less than 10,000.

Figure 1: (Source: DirecTV)

"The entire pay-TV industry is impacted by the secular decline and the increasing rates to secure and distribute programming," a DirecTV spokesperson told CNBC. "We're adjusting our operations costs to align with these changes and will continue to invest in new entertainment products and service enhancements."

Word of the cutback follows the separation of DirecTV from AT&T in August 2021. Under that deal, AT&T kept 70% of the common equity in DirecTV, with the balance going to TPG.

The current form of DirecTV includes the former AT&T US and Puerto Rico video business unit covering satellite, streaming (DirecTV Stream) and IPTV services (AT&T's former U-verse TV service).

Pay-TV declines deepen

Like other pay-TV services, DirecTV is being hit hard by cord-cutting.

DirecTV's numbers are no longer reported publicly, but Leichtman Research Group estimates that DirecTV lost about 400,000 subscribers (inclusive of DirecTV satellite, U-verse, and DirecTV Stream) in the third quarter of 2022. The overall rate of decline for US pay-TV dipped to a worst-ever -6.2% in Q3 2022.

Meanwhile, DirecTV's satellite service will no longer be the home of the NFL's Sunday Ticket Package starting next season. Google recently signed an exclusive deal with the NFL to distribute the premium, out-of-market package via YouTube TV and YouTube Primetime Channels.

Additionally, it's unclear if DirecTV will go alone in the coming years. Dish Network Chairman Charlie Ergen continues to hold the opinion that a merger between DirecTV and Dish is "inevitable." He's argued that there are no regulatory reasons to hold back such a paring – as it was about 20 years ago – partly because the pay-TV market is now flush with streaming competition.

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— Jeff Baumgartner, Senior Editor, Light Reading