John Stankey, chief executive officer of AT&T, is presiding over a company struggling to solve several thorny problems including how its new streaming service, HBO Max, can succeed without being available on the nation’s two leading streaming devices, Roku and Amazon’s Fire TV.

Although that alone would be enough to keep some executives awake at night, Stankey’s worry list has an even more vexing challenge at the top: What to do with DIRECTV, the company’s beleaguered satellite TV service.

Since purchasing DIRECTV in 2015, the satcaster has lost between six million and seven million subscribers due to cord-cutting and, by many measures and accounts, company mismanagement. AT&T decided soon after the sale that it would focus more on streaming than satellite, triggering a company decline in investment in time and money in DIRECTV.

Consequently, DIRECTV’s subscriber decline continues at a rapid pace, and industry analysts speculate that AT&T may need to sell the satellite TV business for dimes on the dollar to save face, and eliminate debt. (AT&T needed to assume debt to complete the purchase in 2015.)

It was under this cloud that Stankey spoke virtually yesterday to the Goldman Sachs Communacopia Conference. The executive, who officially resumed the AT&T top post just 10 weeks ago, addressed the ongoing DIRECTV sale rumors and here is what he had to say. (With my analysis in bold to help decipher Stankey’s corporate-speak.)

Stankey reiterated that AT&T needs to reduce company debt, another sign that the company could be interested in selling DIRECTV, and possibly, other AT&T entities. 

“We want to get the debt in the balance sheet back into our traditional conservative state,” he said. “We’ve used the balance sheet strategically over the years, when we had opportunities to go do some things that we thought would reposition the business for the long-haul, we’ve, of course, used it and used it as a tool. We did that with the Time Warner transaction and we’re now committed to getting it back into the filing trend that we know we want it in to be opportunistic of when that next opportunity pops up and that’s really in a nutshell kind of where we’re focused right now.”

The AT&T chief was coy on rumors that his team is trying to sell certain assets including DIRECTV. But he acknowledged that AT&T is assessing which company holdings still make sense for them.

“…Maybe there’s a little bit more rumors leaking out on whether or not that (selling DIRECTV) is in fact something that’s going to come to fruition remains to be seen and I’m not going to comment on anything, specifically on any unique transaction,” Stankey said.

“But what I would say is, I think what’s important to this management team is, we want to make sure that the assets we have are something that are, one, supporting the key strategic areas, I just outlined. Two, that they’re meaningful in terms of scale that they can produce in growth that we can be good at them, that they can be something that can be differentiated and sustained in the markets that they’re in. And I will tell you that, one of the things I’d like to see the management team be a little bit more effective at what we’re working toward is ensuring that we’re focused and have all of our time and attention on those key strategic areas.”

Stankey and other AT&T executives have said repeatedly that they don’t believe DIRECTV, and satellite TV, can grow now. Streaming is the future, they have maintained. Stankey’s comments that AT&T now wants to focus exclusively on products that can grow would suggest it’s contemplating a DIRECTV sale.

“So if we have an asset that in particular is taking management time and attention and it doesn’t necessarily contribute to those key areas that I just stress…even if it may financially be doing reasonably well…I’d asked whether or not (management) is better served to have a little bit more time and attention on the things that really matter that we think are strategic carrying the business forward.”

“Even if it may financially be doing reasonably well.” DIRECTV continues to show a profit financially, even though it’s losing subscribers.

But Stankey warned that AT&T may not necessarily jettison certain assets (such as DIRECTV) despite the sale chatter.

“And just because the noise is happening, doesn’t mean that there’s something that’s definitive or will come to pass, but I think I’ll take a little bit of that noise to get better decisions is kind of where my head’s at right now,” he said. 

Stankey also reiterated that he doesn’t see the pay TV industry, which includes DIRECTV, being successful in the coming years. AT&T, he says, wants to persuade current pay TV subscribers to shift to streaming. (The company has two live, multi-channel streaming services, AT&T TV and AT&T TV Now. AT&T sees them as alternatives to DIRECTV and the company’s other pay TV service, U-verse.)

“Where the moment momentum is, is in getting into a broader distribution product that can touch more households, have more relationships. Frankly, give us more insights about how the customer is behaving on any given day and we think an SVOD, AVOD offers subscription and advertising together is a far more attractive place to be able to launch haul then, what I would call it, what’s been the workhorse the pay TV product for a period of time,” he said.

Stankey added:

“But clearly (pay TV) is one that’s seen its peak and is working down the backside of the growth curve. And as a result of that, I will tell you will be diligent managing the mature product. We will try to drive as many of those (DIRECTV and U-verse) customers to software ways of doing business with us in the pay TV market and give them a natural glide path to some of our other entertainment based products (streaming).”

Stankey yesterday did not mention Dish, or any other company, that might be interested in buying DIRECTV. But despite the somewhat cryptic nature of his remarks, it’s clear that AT&T is seriously exploring the sale of its satellite TV service.

The TV Answer Man will continue to monitor this development, and report back here when we learn more.

Until then, happy viewing, and stay safe!

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— Phillip Swann