AT&T Exploring Split With DirecTV--3rd Update
By Shalini Ramachandran and Drew FitzGerald
AT&T Inc. is exploring parting with its DirecTV unit, people
familiar with the matter said, a move that would mark a sharp
course correction in strategy for Chief Executive Randall
Stephenson, who billed his $49 billion bet on the satellite
provider as key to the phone giant's future.
The telecom giant has considered various options, including a
spinoff of DirecTV into a separate public company and a combination
of DirecTV's assets with Dish Network Corp., its satellite-TV
rival, the people said.
AT&T may ultimately decide to keep DirecTV in the fold.
Despite the satellite service's struggles, as consumers drop their
TV connections, it still contributes a sizable volume of cash flow
and customer accounts to its parent.
AT&T acquired DirecTV in 2015 for $49 billion. The company's
shrinking satellite business is under a microscope after activist
investor Elliott Management Corp. disclosed a $3.2 billion stake in
AT&T last week and released a report pushing for strategic
changes. Elliott has told investors that AT&T should unload
DirecTV, The Wall Street Journal has previously reported.
There could be regulatory hurdles to any deal with Dish, which
has about 12 million subscribers. When Dish's predecessor EchoStar
Communications Corp. and DirecTV's former owner Hughes Electronics
Corp. tried to merge in 2001, regulators ultimately blocked it on
antitrust grounds, worried that many rural Americans would be left
with only a single option to get their television service. More
recently, Dish Chairman Charlie Ergen held talks to combine with
DirecTV in 2014, but lost out to AT&T.
On the idea of merging the two satellite providers, AT&T
finance chief John Stephens said, "From a regulatory perspective,
it hasn't been successful and I don't know that there is any change
in that regulatory perspective." He added, speaking last week at an
investor conference, "I understand the industrial logic, but quite
frankly it's been tried and has been rejected."
Write to Shalini Ramachandran at firstname.lastname@example.org
and Drew FitzGerald at email@example.com
(END) Dow Jones Newswires
September 18, 2019 18:55 ET (22:55 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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