The Future of DirecTV

[TheBigA]

AT&T has laid out a plan for the way in which it will market DirecTV moving forward. It will focus on selling it in markets without widespread internet service:

https://www.nexttv.com/news/atandts...places-where-cable-broadband-is-not-prevalent

Very revealing article. Clearly the future for AT&T is broadband. Satellite is the antithesis of everything the company stands for. (wired vs. through the air) When I first got DirecTV in my home, it was cheaper than cable. That's no longer the case. Plus cable now comes bundled with internet service. Not as simple with satellite. So the primary marketplace for DirecTV will be in remote areas without broadband. We already knew that. However, if you take AMTRAK on the Northeast Corridor line, just about every house you see has a satellite dish hanging off of it. Hardly any TV antennas. So what does that say?

 

[Don CT]

It says DTV was giving out sweetheart deals to get people to sign up. Those deals dried up and so did the customers.

 

[Y2kTheNewOldies]

https://tvanswerman.com/2020/05/21/will-att-soon-sell-directv/

There is now a rumor that AT&T might have to divest from Directv due to the current pandemic.

The report does not name the bankers, nor say how many are offering this opinion. It also does not say if the bankers are communicating this position with AT&T, or if AT&T is accepting the verdict that it’s time to unload the nation’s top satellite TV service.

“I don’t know if AT&T will go for it, but they may not have much choice,” Fox Business’ Charlie Gasparino said in his report. “AT&T is coming under tremendous shareholder pressure to cut costs…They have a very underperforming asset known as DIRECTV that’s losing subscribers left and right. They have to figure out a way to get it off its balance sheet.”

DIRECTV has lost roughly five million subscribers since AT&T purchased it for $49 billion in 2015. The satcaster’s fortunes have become more bleak since the Coronavirus lockdown with AT&T reporting that DIRECTV and U-verse combined to lose 897,000 subscribers in the first quarter.

 

[TheBigA]

The rest of the article goes on to say that the solution appears to be a merger or sale to its rival DISH. The last time that was being discussed, the FCC ruled against it. Since then, there's been this huge explosion in streaming video. The catch is coming up with a price that Dish can afford and helps AT&T's debt problem.

My view is this is a tough time to sell something, because the value is being driven down. But AT&T is getting new leadership, so that may make it possible.

 

[Syfy]

The rest of the article goes on to say that the solution appears to be a merger or sale to its rival DISH. The last time that was being discussed, the FCC ruled against it. Since then, there's been this huge explosion in streaming video. The catch is coming up with a price that Dish can afford and helps AT&T's debt problem.

My view is this is a tough time to sell something, because the value is being driven down. But AT&T is getting new leadership, so that may make it possible.

Well atat just cancelled the audience network that will probably be saving them some money and they are in partnership with this hbo max I believe also so they are going to be making some money back probably.

 

[KeithE4]

Well atat just cancelled the audience network that will probably be saving them some money and they are in partnership with this hbo max I believe also so they are going to be making some money back probably.

Not as long as they charge over $150 a month, including equipment rentals and taxes, on the higher tiers. I had the Genie boxes and the 2nd highest tier, and paid about $180 a month. And that didn't include the MLB and NHL packages, which were much higher than the equivalents on the internet. plus $300 for NFL Sunday Ticket. Being on Social Security now, I can't afford that, so I cancelled in January after over 6 years with them. Technical issues got worse after AT&T bought them as well.

I pay $53 for YouTube TV, and that includes the major sports channels. A couple of the locals (Univision, TBN, and Ion) aren't included, although a few of the subchannels are. MLB.TV and NHL Center Ice are about $20 cheaper for the season. The NFL "forces" me to the bar this fall.

AT&T has already said that their satellite-launching days are over, now that the T-16 satellite was launched at the end of last year. The ones that are up there now probably have a 10-15 year lifespan, and if that's true, that means DirecTV and DISH are done in their present form before the 2030s are over. I don't think either will survive this decade. I have no idea why they would bother to merge two dead-technology companies that will go the way of Atwater-Kent in the not-too-distant future.

 

[PTBoardOp94]

Not as long as they charge over $150 a month, including equipment rentals and taxes, on the higher tiers.

The cable TV cabal should be a poster child for future business schools of killing the goose that laid golden eggs. I got a letter from Spectrum on Friday that my rate was going up to $153.97 plus $9.85 in taxes and fees. That's an increase from last month of $35.

The reason is because my promotional pricing expired. I can assure you, my search is on for replacements.

 

[davideduardo]

The cable TV cabal should be a poster child for future business schools of killing the goose that laid golden eggs. I got a letter from Spectrum on Friday that my rate was going up to $153.97 plus $9.85 in taxes and fees. That's an increase from last month of $35.

The problem is not the cable TV operators for the most part.

When CATV started, stations loved having those systems expand their coverage areas.

But as cable added paid channels in the early era of HBO and the rest, the "free" cable only services like CNN and MTV saw a potential goldmine; they could charge the cable companies to carry them.

As Cable channels developed, local stations decided they deserved a piece of the carriage fee pie. And then ESPN figured they could pay big money to teams and leagues for games and pass it on to cable companies...

Al the while, the cable companies had to pass on the increased expenses to their subscribers.

Most of what we pay today is for TV station and cable network carriage fees. I found out that my carrier would allow subsets to be removed, and I had all sports channels taken off. It saved me over $400 a year, just for those sports channels!

I heard from a rather reputable source that my local major network affiliate TV stations that have CBS, NBC, ABC, FOx, UVN and Telemundo derive over half of their revenue from those fees, and without them they would not be profitable.

 

[TheBigA]

The reason is because my promotional pricing expired. I can assure you, my search is on for replacements.

Had the same experience a few months ago. Call them and find out their current specials. Until then, you're month to month with no contract.

 

[PTBoardOp94]

The problem is not the cable TV operators for the most part.

I agree that the cable and satellite providers are mostly along for the ride. Their only recourse against rate increases is pulling the channels, and enough of their customers value each channel in the bundle to make that difficult from a customer-service perspective.

I heard from a rather reputable source that my local major network affiliate TV stations that have CBS, NBC, ABC, FOx, UVN and Telemundo derive over half of their revenue from those fees, and without them they would not be profitable.

Yes, this is accurate. Nexstar's broadcast group earned 51% of their revenue from re-transmission fees in the quarter ended March 31. In turn, much of that money gets forwarded to CBS, NBC, ABC, Univision and the others. I would not be surprised if there are individual markets where the re-transmission money is substantially higher than the advertising money.

 

[KeithE4]

Yes, this is accurate. Nexstar's broadcast group earned 51% of their revenue from re-transmission fees in the quarter ended March 31. In turn, much of that money gets forwarded to CBS, NBC, ABC, Univision and the others. I would not be surprised if there are individual markets where the re-transmission money is substantially higher than the advertising money.

I'd be surprised if there are any markets where ad money is greater than retrans fees. Maybe the smallest markets, but that's about it. If more and more people go back to using antennas, broadcasters will be in deep doodoo. This isn't the 1970s and earlier. Ad dollars alone won't pay for all that expensive local news programming the larger stations run these days. Anchors and reporters cost money, even after all that fancy, expensive studio and ENG equipment has been paid for.

I remember one company several years ago -- I think it was Meredith, but don't quote me -- had a memo leaked out that called antenna viewers freeloaders, and they were irrelevant to the company. Things have sure turned around in the last half-decade or so!

 

[joebtsflk1]

AT&T has already said that their satellite-launching days are over, now that the T-16 satellite was launched at the end of last year. The ones that are up there now probably have a 10-15 year lifespan, and if that's true, that means DirecTV and DISH are done in their present form before the 2030s are over. /QUOTE]

I remember one company several years ago -- I think it was Meredith, but don't quote me -- had a memo leaked out that called antenna viewers freeloaders, and they were irrelevant to the company. Things have sure turned around in the last half-decade or so!

But if we have markets where retrans fees equate to some 50% of all broadcast TV revenues, stations would seem to have little incentive to maintain large towers for direct broadcast. Seems the era of tall towers might be numbered, just like the satellites.

 

[KeithE4]

But if we have markets where retrans fees equate to some 50% of all broadcast TV revenues, stations would seem to have little incentive to maintain large towers for direct broadcast. Seems the era of tall towers might be numbered, just like the satellites.

Not as long as the FCC is around. A transmitter and tower, shared or standalone, is still a requirement for a TV broadcast license/PSIP channel, and that is not going to change anytime soon.

I think the day will come, especially once ATSC-3 is released commercially, for duopolies to be required to operate only one physical transmitter. Now, with the improvements of the last few years, it can be done using the current ATSC-1. That would save a lot of money in maintenance costs right there, not to mention freeing up spectrum space.

 

[Syfy]

The problem is not the cable TV operators for the most part.

When CATV started, stations loved having those systems expand their coverage areas.

But as cable added paid channels in the early era of HBO and the rest, the "free" cable only services like CNN and MTV saw a potential goldmine; they could charge the cable companies to carry them.

As Cable channels developed, local stations decided they deserved a piece of the carriage fee pie. And then ESPN figured they could pay big money to teams and leagues for games and pass it on to cable companies...

Al the while, the cable companies had to pass on the increased expenses to their subscribers.

Most of what we pay today is for TV station and cable network carriage fees. I found out that my carrier would allow subsets to be removed, and I had all sports channels taken off. It saved me over $400 a year, just for those sports channels!

I heard from a rather reputable source that my local major network affiliate TV stations that have CBS, NBC, ABC, FOx, UVN and Telemundo derive over half of their revenue from those fees, and without them they would not be profitable.

Oh who is your tv provider. I have sling tv through internet but I thought almost all major cable carriers had some mandatory sports channels in their tv packages whether you wanted them or not.

 

[davideduardo]

Oh who is your tv provider. I have sling tv through internet but I thought almost all major cable carriers had some mandatory sports channels in their tv packages whether you wanted them or not.

I have Frontier FiOS, which is totally tiered in my market. There is some sports stuff that still makes it through, but the expensive ones like ESPN are not charged.

 

[Syfy]

I have Frontier FiOS, which is totally tiered in my market. There is some sports stuff that still makes it through, but the expensive ones like ESPN are not charged.

Oh that is through the internet as well I know.

 

[Y2kTheNewOldies]

AT&T May Soon Have DIRECTV Buyer: Report - The TV Answer Man!

AT&T has received bids for DIRECTV for roughly $15 billion and could close a deal in early 2021, according to a Wall Street Journal report. The bids include ones from Apollo Global Management, and Churchill Capital Corp, both equity investment firms. WSJ writes that Apollo’s bid was for slightly...

tvanswerman.com

In this report Apollo and Churchill have been named as candidates to get Directv if that is approved.

The bids include ones from Apollo Global Management, and Churchill Capital Corp, both equity investment firms. WSJ writes that Apollo’s bid was for slightly less than $15 billion while Churchill’s offer was valued at higher than that amount.


What’s unclear is whether AT&T is offering a majority or minority stake in the satellite TV service, and how DIRECTV would be managed under the new ownership team. AT&T is believed to be interested in handing off the management duties to the buyer so it can focus instead on streaming ventures such as HBO Max.


“The auction is in a late stage and should the company reach a deal with one of the suitors, it could be completed by early next year,” WSJ writes.

 

[Y2kTheNewOldies]

AT&T may have finally found a buyer for DirecTV

AT&T has reportedly jumped into exclusive talks with private equity firm TPG about acquiring a minority stake in DirecTV, according to Reuters. | AT&T has reportedly jumped into exclusive talks with private equity firm TPG about acquiring a minority stake in DirecTV, according to Reuters.

www.fiercevideo.com

AT&T has reportedly jumped into exclusive talks with private equity firm TPG about acquiring a minority stake in DirecTV, according to Reuters.


The firm is said to currently be in the lead to buy the struggling satellite provider in a deal that could value the company at $15 billion. In 2015, AT&T paid $48.5 billion for DirecTV and took on the company’s approximately $18 billion in net debt.

Reuters said the deal – which could be announced in the coming weeks – would help AT&T cut its net debt down to around $150 billion.

 

[Y2kTheNewOldies]

AT&T to Spin Off DirecTV in $7.8 Billion Deal With TPG Capital

AT&T will spin off its video business including DirecTV into a new company in a deal with TPG, which acquired 30% of the new company.

www.thewrap.com

 

[TheBigA]

Talk about fire sale price:

That value is roughly 30% of what AT&T paid for the satellite company, which it bought for $49 billion in 2015.

So they put their failed video platforms into a new box and don't have it dragging down their value any more:

AT&T’s DirecTV Spinoff Wins Points for Strategy, but Not for Financial Impact

Analysts worry that the spinoff will increase AT&T's dividend payout ratio and leverage. But it could open the door to a merger of DirecTV and Dish Network.

www.barrons.com