AT&T takes an absolute dip in its merger with DirecTV

of synergies department

So we’ve noticed a few times how adorable giant telecom providers, as companies that have spent most of the last century as government pampered monopolies, are when they try (and then inevitably fail) to innovate or compete seriously in more normal markets. . For example, Verizon’s attempt to go from a clunky old phone company to a sexy new ad media darling has been a cavalcade of clumsy mistakes, misstep and wasted money.

AT&T has encountered similar problems. Under CEO Randall Stephenson, AT&T has spent more than $ 175 billion on mergers with DirecTV and Time Warner, hoping this would ensure its ability to dominate the pay-TV space with brute force. But the exact opposite has happened. Burdened with so much deal debt, AT&T forwarded boring price increases to its consumers. It’s also adopted such a confusing branding strategy – with so many different product names – that it even has confused his own employees.

As a result, AT&T lost 3,190,000 pay-TV subscribers last year alone and about 7 million since 2018. Not exactly the kind of “dominance” the company envisioned. Despite a $ 42 billion tax break from the Trump administration for literally doing next to nothing (42,000 layoffs, in fact), AT&T is now forced to consider cheap deals for DirecTV after investors finally got tired of the company’s merger madness. Thus, a company that was acquired for $ 67 billion (including debt) in 2015, is likely to be sold for less than a third of that amount:

The telecommunications giant invited a handful of second-round contenders for the struggling satellite TV broadcaster’s auction last week, even though first-round bids had valued DirecTV well below $ 20 billion , The Post learned.

The opening bids of a buyout company coterie amounted to approximately 3.5 times DirecTV’s approximately $ 4.5 billion EBITda, implying a valuation of approximately $ 15.75 billion. dollars, according to a source familiar with the process. ”

Many pundits told AT&T it was stupid to buy a satellite TV provider on the eve of the cable-cutting revolution. As such, it’s quite surprising that AT&T insiders are taken aback by all of this:

“It is very, very surprising that they are selling DirecTV at such a low price – it is a serious destruction of value,” said a former AT&T executive who requested anonymity.

An AT&T spokesperson declined to comment. ”

AT&T bought a company based on archaic technology, integrated it into a confusing array of confusing and jarring brands, then tried to charge consumers with debt in the form of relentless price hikes on top of a shift in market. massive paradigm in television where price matters. more than ever. Yeah, totally surprising how that didn’t work out.

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Filed Under: cord cut, randall stephenson, satellite tv, tv
Companies: at & t, directv

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