Q. I agree with you that DIRECTV will be sold probably soon. But my question to you is what will it be like after it’s sold? How will it be different from now? Will it still have the Sunday Ticket? Will its customer service be any better? Will it add more channels like the Pac 12 Network? Your thoughts, please. — Tim, Manhattan Beach, California.
Tim, that is a great question. AT&T is looking to sell DIRECTV to focus more on streaming video (HBO Max, AT&T TV), and streamlining operations (eliminating debt incurred from buying DIRECTV). The company believes that satellite TV is in decline and will likely lose a significant number of subscribers in the next few years.
Many DIRECTV subscribers have posted messages here expressing hope that AT&T sells the nation’s largest satellite TV service as soon as possible. Their belief is that overall service, particularly customer service, will instantly improve under new ownership. Some customers say AT&T has ignored DIRECTV’s needs in recent years to instead invest in new online ventures.
There’s plenty of evidence to support that sentiment. But if AT&T sells DIRECTV, as I expect it will, that doesn’t mean the new owner will suddenly pour in money to fix the satcaster’s glaring needs, such as improved marketing, customer service, program acquisition (yes, the Pac 12 Network, among others) and new technologies (more 4K channels, etc.)
In fact, the odds are good that the new owner will spend even less than AT&T has.
I say that because reports from both the New York Post and The Wall Street Journal indicate that an equity firm is most likely to buy DIRECTV. (The reports say AT&T fears that a merger with Dish could be rejected by federal regulators.) Apollo Global Management, which last year purchased some local TV stations from Cox Media, has been mentioned by both publications.
Equity firms buy companies as investments, usually short-term investments. They take over a company with significant resources, squeeze its spending to save money, and then flip it to another company (before it falls apart) for a sizable profit.
I can’t imagine Apollo, or any other equity firm, doing it any other way. Under Apollo’s control, it would likely cut DIRECTV’s spending even further, and then wait until the time was right in Washington, D.C. to sell it to Dish. That might mean that DIRECTV’s subscriber base would fall even faster, but the only number Apollo would care about is the number of dollars that Dish, or another company, would pay in two years to take it off its hands.
That doesn’t mean that Apollo would jettison the NFL Sunday Ticket; DIRECTV’s contract with the NFL doesn’t expire until after the 2022 season. It also doesn’t mean that Apollo would remove other popular channels and services, either. The equity firm would keep DIRECTV doing just well enough so it would still be an attractive company to purchase in a few years.
Apollo also has a history of hiring a management team to run a TV-based company rather than run it itself. (Apollo still uses Cox Media to manage its local TV stations.) So it’s possible that AT&T would stay on as a minority owner/management team until DIRECTV is sold again.
Tim, hope that makes sense. Happy viewing, and stay safe!
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— Phillip Swann