Q. I’ve been a DIRECTV subscriber for years, but I hate AT&T, which now owns them. Is there any chance that AT&T will sell DIRECTV, maybe to Dish? — Bob, Indianapolis.
Bob, your lament is quite common among DIRECTV subscribers, many of whom send me e-mails voicing frustration with their satellite TV service since AT&T bought it for $67 billion in 2015.
The complaints often say DIRECTV’s customer service has declined appreciably since the AT&T takeover. There’s also a general feeling that AT&T is less interested in introducing new and innovative services, something DIRECTV has been known for over the years.
AT&T’s purchase of DIRECTV, the nation’s number one satellite TV operator, has not gone well for the telco, either. Since the sale was made official, DIRECTV has lost roughly two million customers. The spread of cord-cutting is certainly a cause, but subscriber dissatisfaction over DIRECTV’s annual price hikes, and AT&T’s uncertain stewardship of the satcaster, are factors as well.
So, to your question, will AT&T sell DIRECTV? Has the company grown tired of trying to keep an expensive TV service profitable when so many Americans are seeking lower-cost alternatives such as Netflix or Hulu?
I think the answer is yes, and it wouldn’t surprise me if AT&T sold DIRECTV to Dish in the coming months.
Dish is the nation’s second largest satellite TV service with slightly less than 10 million subscribers. (DIRECTV still has more than 18 million.) While Dish is also losing customers to cord-cutting, and the expansion of streaming options, the acquisition of DIRECTV would give it a total of 27 million satellite TV subscribers. That would make Dish the nation’s largest pay TV company. (And the number would reach 30 million when you add in Sling TV, Dish’s live streaming service, which has 2.47 million subscribers.)
With roughly 30 million subscribers, and no competition in the satellite TV category, Dish could stay profitable for years by generating more advertising, and pressuring programmers to offer lower carriage fees. (Think of it. Few programmers would want their channels suddenly removed from a pay TV service that reaches more than 30 million homes.)
You might say the federal government would frown upon approving a merger that would give so much power to one video company, particularly considering that the FCC rejected a merger between Dish and DIRECTV in 2002 on grounds it would be anti-competitive.
But with the rise of streaming, the pay TV business (cable, satellite, telcos) no longer dominates the video category as it did 17 years ago. Consumers today have a multitude of video options, and the number is growing almost daily. Dish and DIRECTV could even argue that the merger/sale is necessary now to keep the satellite TV business afloat in the coming years.
For AT&T, the sale would give the company a chance to re-set its strategy, and focus entirely on the streaming business. AT&T now owns the live streamer, DIRECTV Now, but it plans to soon rename it AT&T TV Now. (Yes, the name change could have something to do with the sale of DIRECTV, the satellite service, and the DIRECTV brand name.) The company also owns HBO and it plans to offer multiple streaming services under that brand name.
I have no inside knowledge that talks between AT&T and Dish are ongoing, but Dish Chairman Charlie Ergen has publicly lusted after DIRECTV for years. There’s no doubt in my mind that he would be most interested in making a deal. And there’s no doubt in my mind that AT&T’s top executives would like an escape hatch for DIRECTV.
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— Phillip Swann