Q. I read that someone is saying AT&T should sell DIRECTV. Do you think they should. As a DIRECTV subscriber, I would like to see it. — Berle, Nashville.
Berle, what you probably read is today’s news about a hedge fund group declaring that AT&T needs to make wholesale changes, including selling off DIRECTV.
The group, Elliott Management Corp, recently invested $3.2 billion in the telco, but it charges that AT&T’s management team has made a serious of mistakes. The errors, the group says, include the acquisition of the satellite TV service, and possibly, AT&T’s purchase of Time Warner as well.
Elliott says it wants AT&T to focus on its strengths, such as wireless technology, rather than branching out in businesses it doesn’t understand.
Well, Berle, as the old saying goes, Elliott took the words right out of mouth.
Since AT&T bought DIRECTV for $67 billion in 2015, it has proceeded to destroy almost everything that was great about it. Customer service has suffered. Technology innovation has declined. Sports programming has diminished. And so on. The DIRECTV customer experience has become a dismal experience in comparison to what it was in the first two decades (1994-2014.)
AT&T’s purchase of DIRECTV 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 major factors.
I submit that DIRECTV’s strong brand value, accumulated between 1994 and 2014, would have significantly limited subscriber defections over the last five years if a more suitable company was running the show.
So, do I think AT&T should sell DIRECTV? The answer is an unequivocal yes, both for the sake of AT&T, and the remaining 18 million subscribers to DIRECTV. AT&T has never shown any clue that it understands the TV audience, and I strongly doubt that it ever will.
Now, will it sell DIRECTV? That’s a more difficult question. The list of possible suitors is considerably shorter since AT&T put its clumsy hands on the reins. Rival satcaster Dish is always a likely candidate to be interested, but even Dish might be hesitant unless the price is right.
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— Phillip Swann