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AT&T is considering getting rid of DirecTV as TV business thoughts, WSJ reports

  An AT&T logo seen on the outside of a building.
Enlarge / An AT&T store in Chicago.

AT&T is considering "sharing roads" with DirecTV, just four years after buying the satellite company, the Wall Street Journal reported today. The journal report does not use the word "sales" to describe what AT&T is considering, but the end result may be that AT&T no longer owns DirecTV.

"The telecom giant has considered various options, including a spinoff of DirecTV to a separate public company and a combination of DirecTV's assets with bowl networks, its satellite TV rival," said the Journal report, quoting "people who are familiar with the matter. "

It's still early in the process, so AT&T could get stuck with DirecTV. "AT&T can ultimately decide to keep DirecTV in the fold. Despite the struggle of the satellite service, when consumers lose their TV connections, it still contributes to a significant volume of cash flow and customer accounts to its parent companies," the magazine reported.

cash generated by DirecTV helps drive other investments at AT&T and helps the company pay down its "high net debt burden, which was more than $ 1

60 billion earlier this year," the Journal report says. AT&T's $ 49 billion purchase of DirecTV contributed to that debt burden.

A spinoff of DirecTV would probably not happen "until the middle of 2020 of tax," the journal report said.

We contacted AT&T and will update this story if we get an answer.

TV business in rapid decline

AT&T completed the acquisition of DirecTV in July 2015, with high hopes of dominating the pay-TV business with both DirecTV satellite and a new online service based on DirecTV. But AT&T's total number of video subscribers dropped from 25.4 million in Q2 2018 to 22.9 million in Q2 2019, and AT&T told investors last week that they expect to lose an additional 1.1 million TV customers in the third quarter.

Since April, AT&T had faced a lawsuit claiming that it was lying to investors to hide the failure of its DirecTV Now streaming TV service. Last week, the lawsuit was updated to include allegations that AT&T executives encouraged sellers to create fake DirecTV Now accounts and register AT&T customers with DirecTV Now "without the customer's knowledge."

AT & T's TV strategy was criticized in an open letter last week by activist investor Elliott Management Corp., which has a $ 3.2 billion stake in AT&T. Elliott urged AT&T to consider divesting DirecTV, which may have contributed to AT&T investigating whether the TV division should be discharged.

AT&T also purchased Time Warner Inc. 2018 and hopes to gain a large portion of the streaming industry with next year's launch of HBO Max. But Elliott said, "AT&T has not yet formulated a clear strategic basis for why AT&T must own Time Warner."

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