AT&T Inc. (NYSE:T) may be looking for ways of improving its business but divesting DirecTV is not among the options the company is contemplating. The company has been under pressure after Elliott Management which owns $3.2 billion interest in the company called for recommendations to enhance operations and improve leadership.
AT&T not ready to yield by selling or divesting DirecTV
Sources familiar with the issues told CNBC that the company will not consider divesting or selling DirecTV. Elliott Management is pushing for either option and holds that a Dish-DirecTV merger could happen in the current regulatory environment.
On Wednesday the Wall Street Journal reported that the company was considering partying ways with DirecTV. Sources familiar with the matter indicate that the company is considering numerous alternatives including spinning off the entity into an independent company or combining it with Dish Network.
AT&T and Dish have not begun any discussion regarding a merger as both companies consider the deal as hard to sell for approval from regulators. However, Dish could be enticed to consider it if Chairman Charlie Ergen gives an okay that the risk-reward benefit is sufficient enough. Spokespeople at Dish have not weighed in on the matter.
Eliot Management could push for the replacement of Randall Stephenson as the CEO of AT&T if the company declines to split off the DirecTV segment. The hedge fund has privately called on the company to carry out a wide search for a new CEO once Stephenson retires. Stephenson is likely to next year and he prefers WarnerMedia CEO John Stankey to take over.
DirecTV business declining
The company acquired DirecTV for $67 billion back in 2015 with the thinking that they could bundle wireless service and U-Verse fast home internet service with DirecTV’s satellite TV service. AT&T expected the TV business to decline but the rate at which the company has lost customers has been surprising. The segment has shed millions of customers as more people shift to internet streaming options. It has so far lost 251,000 customers in the first half of 2019.