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AT&T Businesses Television The Almighty Buck

AT&T Offloading DirecTV Could Be a 'Fire Sale' As Company Weighs Low Bids (arstechnica.com) 59

Posted by BeauHD from the trim-the-fat dept.
An anonymous reader quotes a report from Ars Technica: AT&T is reportedly moving ahead with its plan to sell DirecTV despite receiving bids that value the satellite division at less than one-third of the price AT&T paid for it. AT&T bought DirecTV for $49 billion in 2015 and has lost seven million TV subscribers in the last two years. In late August, news broke that AT&T is trying to sell DirecTV to private-equity investors and that a deal could come in at less than $20 billion. The New York Post yesterday provided an update on the sale process, writing that AT&T is pressing ahead with an auction even though it is "shaping up to be a fire sale." The sale process is being handled for AT&T by Goldman Sachs.

"Opening bids from a coterie of buyout firms came in at around 3.5 times DirecTV's roughly $4.5 billion of EBITDA, implying a valuation at around $15.75 billion, according to a source close to the process," the Post article said. Despite the low first-round bids, AT&T "last week invited a handful of suitors into the second round of an auction of the struggling satellite-TV broadcaster," the Post wrote. Private-equity firms "are looking to milk the shrinking company for cash as DirecTV's subscribers steadily flee to lower-priced streaming-video services like Netflix," the Post wrote. AT&T could retain a minority stake in DirecTV after a sale.
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AT&T Offloading DirecTV Could Be a 'Fire Sale' As Company Weighs Low Bids More

AT&T Offloading DirecTV Could Be a 'Fire Sale' As Company Weighs Low Bids

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  • I'll give you thirty-five bucks to take it off your hands... as long as it isn't losing money. Oh, wait.

    • Again, everyone forgets Sunday Ticket. Take that away and DirecTV falls apart. But the NFL keeps giving exclusive out of market rights to DTV.

    • Re:I'll give you thirty-five bucks for it. (Score:4, Insightful)

      by ShanghaiBill ( 739463 ) on Wednesday October 07, 2020 @10:53PM (#60583782)

      ... as long as it isn't losing money. Oh, wait.

      RTFS. DirectTV is not losing money. It is earning $4.5B per year.

      The problem is that the earnings are dwindling.

      If you figure profits will erode by 20% annually and the company will limp along for 5 more years, then that gives you a valuation of about $15B, which is about what the private equity firms are offering.

      The risk is that customer abandonment will happen even faster.

      • Comment removed based on user account deletion

      • Re: (Score:2)

        by Monoman ( 8745 )

        It would be interesting to see how many DirecTV customers are now on Uverse or some other AT&T service.... .vs how many they lost completely.

        • Speaking as somebody who was a beta tester for DirecTV Now. I left when they raised their prices significantly but their DVR was so badly broken it was easy to miss entire episodes of a show.

          In other words. I agree with you. If they couldn't make a DVR work for streaming services I don't even want to think about trying their other services like satellite.

          • Years ago, I got directv to feed a TiVo, as they had the two tuner model.

            I wore out a couple, and eventually they replaced them with their own.

            I was *shocked* at how bad those things were. Aside from the crummy interface, I had to power it down once or twice a week just to stop the fast forward . . .

            And when TiVo and others came out with six tuner models, there wasn't one for directv, who was engaged in a long spat with them by then.

            When I called to cancel, and was asked why, as I'd had them for over a dec

            • I agree about their DVRs. I signed up for DirecTV in 2008 & got their then-best HD DVR (HR21, I think). At first, it wasn't bad... but sometime around 2010 or 2011, they pushed out a major software update, and its usability & reliability *completely* went down the toilet, with all the problems others have noted.

              Around 2014, I switched to U-Verse. No complaints about their DVR (it was, frankly, fantastic), but once the promo pricing ended, the TV service was *absurdly* expensive... like, $128/mo (U30

            • No, I don't need six, but three running simultaneously used to be common, and occasionally four.

              Tivo setups can also include one or more Tivo-mini clients, streaming either live TV or a recording from the main Tivo box to another room. In this scenario, two tuners are insufficient.

              • Re: (Score:2)

                by hawk ( 1151 )

                in a corner case of usage, perhaps.

                Playing a recording or streaming doesn't use a tuner.

                If you actually have people watching four or more *live* broadcasts, I suppose the extras could come in handy, but . . .

                • You can get to 3 tuners easily: one box (remote or local) playing live TV, while recording two other overlapping programs. They don't have to overlap for the full length of the programs: just 5 minutes of overlap is enough to require another tuner.

          • Re: (Score:1)

            by bob4u2c ( 73467 )
            I had DirecTv with an older SD Tivo box. That thing was great, I upgraded the drives to record nearly 300 hours of content. With the Tivo logic I never missed a new show, and I would often record whole seasons to bing watch later.

            Then Tivo released an HD box, and after my SD one had a tuner failure I upgraded. Bad choice. The first thing I noticed was that almost every HD recording was just blank. At first I thought the channel messed up, but during the recording of an HD channel I was watching it, s

          • And so ironic since when I was on DirecTV it had TiVo in the same box, the best DVR ever made. The big media companies always try to make their own DVR and set top boxes and *always* end up with substandard crap. I liked DirecTV when I was on it, half the price of cable and with good service. But AT&T has not done well by it.

          • Used to have it ... wasn't thrilled with the quality, or it going out when there were storms.
            Tried to upgrade to the DirecPC ... got the second phone line installed ... then spent a couple of weeks dealing with their 'support' with zero results.

            Came home to find Qwest was *finally* offering DSL in the area .. it was installed a day or two later, and up and running flawlessly the same day

            Yeah, with 'customer service' like that, I'm surprised they have hung on as long as they have. Everything I have heard s

      • Re: (Score:2)

        by DarkOx ( 621550 )

        The dirty little secrete in the satellite TV biz is its all about the dealers and re sellers. The "Bob's TV and Appliance"'s of the world were suffering and have been for years, but were responsible for a lot of sat-tv enrollment. COVID is likely to finish most of these guys off for good. While the "BIg Box" guys are actually doing a bit better the trends with them have been away from selling provider bundles as well, as the Xfinity model lets call it of selling and supporting a full service suite is takin

    • Re: (Score:2)

      by antdude ( 79039 )

      "I'd buy it for a dollar." / https://www.youtube.com/watch?... [youtube.com]

  • Buy DirecTV and become DirecTV; the DirecTV of old, the DirecTV that helped TiVO fight and win the patent wars against entrenched advertiser interests. The DirecTV that should have been. The DirecTV that didn't waste internet bandwidth or go into direct competition with its own hardware and software vendors.

    • AT&T bought DirecTV and, predictably, it went straight to shit. Realistically these days there's little point in even having it because once you factor in streaming services (buy a Roku) and get the few over-the-air channels you might need for local news and such DirecTV is cost prohibitive.

    • Buy DirecTV and become DirecTV; the DirecTV of old, the DirecTV that helped TiVO fight and win the patent wars against entrenched advertiser interests. The DirecTV that should have been. The DirecTV that didn't waste internet bandwidth or go into direct competition with its own hardware and software vendors.

      You must be talking bout a completely different Dish Network that I'm familiar with.

      There's only one person that can fix this: Ryan Reynolds . . .

    • The problem is that DirecTV's market share is dwindling.

      20 years ago there were many locations where terrestrial TV options were not available. There are many fewer of these locations today.

      • Yea, but most of those areas only have one other option; a Cable monopoly that has illegally bribed the apartment owner to illegally claim to their tenants it is illegal to put DirecTV dishes on their roof, then offer a 3-month discount on the Cable company.

        • (And incidentally, the 3-month discount is probably itself also illegal under antitrust laws that, predictably, also aren't being properly enforced.)

  • Coming up with $15+ billion from a 3.5x multiple is actually very realistic. The only reason it sounds low is because of what it was purchased for originally, which was probably way over inflated at the time.

    • Coming up with $15+ billion from a 3.5x multiple is actually very realistic.

      Not if revenue is declining quickly, which will make earnings decline even more quickly.

  • Oh just de-orbit the satellites and be done with it, become a streaming service like everyone else.

    • Re: (Score:3, Funny)

      by Random361 ( 6742804 )

      Oh just de-orbit the satellites and be done with it, become a streaming service like everyone else.

      If they do this can they make sure the flaming debris hits Facebook HQ?

    • Not everywhere has fiber, cable, fixed wireless options, or even DSL that's "usable". For some satellite is the only source for television.

      We've been shopping around for more rural location to get out of the city, the number one thing that's become a real deal breaker is a lack of internet options, even in places that are with-in FOUR miles of a moderately sized town (and with-in 40 minutes of a major city) the only thing available is shitty "up-to" 3mbps DSL. Are you f***ing kidding me?

      Can't wait for Starl

  • Oh my God! THEY'RE HAVING A FIRE! Sale.

    And, scene.

    I certainly hope I passed the audition.

  • In 3rd world countries with little if any broadband infrastructure it makes sense, but in europe and the USA (and presumably down under too) where cable broadband, 4G and soon 5G are commonplace and streaming is easy plus with digital terrestrial broadcast TV still there with far more channels than in the 80s when satellite TV came of age, it makes little sense any more.

    • "In 3rd world countries with little if any broadband infrastructure it makes sense, but in europe and the USA (and presumably down under too) where cable broadband, 4G and soon 5G are commonplace and streaming is easy"

      It depends on where you are. I have cable internet now but for years I lived where there was only cellular or a wisp. And both sucked. Much of the USA has internet worse than the third world, where at least cellular gives a decent data allotment.

      " plus with digital terrestrial broadcast TV sti

      • Re: (Score:2)

        by Viol8 ( 599362 )

        "Not where I live, even in the biggest city around here there are only ten, and three of those are PBS."

        Wierd. Here in the UK there are well over 100 in London and not much less in the countryside.

    • "digital terrestrial broadcast TV still there with far more channels than in the 80s when satellite TV came of age"

      Not here. The local translator stations went dark in 2004, and contrary to promises were never replaced.

    • In 3rd world countries with little if any broadband infrastructure it makes sense, but in europe and the USA (and presumably down under too) where cable broadband, 4G and soon 5G are commonplace and streaming is easy plus with digital terrestrial broadcast TV still there with far more channels than in the 80s when satellite TV came of age, it makes little sense any more.

      Until the streaming services all steadily raise their rates until you'd be better off with cable or satellite. And that's happening fast.

      No. I think satellite will be with us for quite a while in the West. It's still the overwhelming favorite in rural and outer-ring suburban areas where cable can be sparse and cell reception is barely LTE, with 5G likely never to come there.

    • Downunder? no NZ and Oz are sparsely populated.

      In the case of NZ winding up analogue television transmission where there was significant use of VHF low band (46 to 68MHz or so) and power levels in excess of 100kW per channel to get TV into far flung places over difficult terrain, and hundreds of low power infill sites. The first thing they did was stand up free to air Ku band satellite using MPEG2 technology (set top boxes were cheap as dirt). Then came the DVB-T roll-out using MPEG4 which supported HD, onl

    • Broadband infrastructure in the US is in the cities only. And even then it's not necessarily the best. I bought my condo after 2000 and it still had the 2 analog cables with an A/B switch, or for double the price they could stick a digital converter there. So amazed at the low tech service here in the heart of silicon valley. I went with satellite instead as it was vastly cheaper and the dish was already in place from the previous owner. If you're not in a major city, then broadband is often owned by m

  • When I lived in a small town in southern Utah. It was much better than the local cable tv and the price was much more reasonable. Being a desert we didn't have much trouble with rain fade, either. But with the growth of streaming any place that has decent internet access, which that town got this century, can do without the satellite.

  • rising prices screwing over there streaming service and basically telling all the cutsmers unless they make them tons of profit by buying the largest packages they dont want them. well the customer responded and left en mass.

  • when does their exclusive with NFL Sunday ticket run out? That has to be a significant number of subs they will lose.

    • NFL TICKET commercial user will be hard steaming. Unless att is willing to give an BAR 100meg + fiber line for free or price it the same as basic internet when you take an commercial TV package. And the TV boxes will need outports to fix into the in place matrix switcher system.

      Maybe on fixed LTE / 5G with no caps, no deprioritization, no slowdown for the same.

  • AT&T should bid on DirecTV (Score:4, Funny)

    by JoeyRox ( 2711699 ) on Thursday October 08, 2020 @08:49AM (#60584748)
    If nobody is wiling to pay an inflated price for DirecTV then AT&T should buy it from itself at a high markup and record the gain as earnings.

    • If nobody is wiling to pay an inflated price for DirecTV then AT&T should buy it from itself at a high markup and record the gain as earnings.

      After all the shit I've seen companies pull in the past decade or so, I'm not even sure if this is a joke.

    • That's Enron level math there!
  • They couldn't get the numbers they wanted with Uverse so they bought DirecTV. Not understanding the reason they couldn't get the numbers was people are done with AT&T! When the purchase was announced I had been a DirecTV subscriber for 7 years. Enjoyed the service, and rarely had any issues. I called that day to cancel service. They talked me in to staying but a year later and everything I feared had come true. Cut the "cord" and haven't looked back. Then they created DirecTVNOW. I thought great! I can
  • I'm on DirecTV now. Any guesses how long I have to switch before they start bleeding me?

  • I mean really, there are DOZENS of informercial-only channels! How the hell can that be profitable?

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