Randall Stephenson, Chief Executive Officer, AT&T Inc (NYSE:T) had an introductory discussion with Elliot Management Corp’s Manager – Jesse Cohn on September 17, 2019, in New York. The investor – Elliot is insisting for rethinking on its business strategy. Jesse is also pressing to sell more assets of AT&T.
Elliot Challenges leadership of AT&T
Jesse had challenged the leadership of AT&T and also disapproved its diversification into the media business. He also told AT&T to review activities including Wellness operations in Mexico, Direc TV Satellite Division and said they are not fit for the long term strategy.
AT&T says no to alter the business strategy
AT&T has announced no to change its overall business strategy but agreed to divest smaller assets to tackle the debt. The company plans to divest a stake in Central Europe based TV operator and sports networks in four regions. It will also offload the real estate worth $500 million.
According to the people familiar with the matter, even before Elliot demanding the sale and change in business strategy, AT&T exploring options to sell Direc TV business. It also planned to spin-off Direc TV into a separate entity. In the recent period, Direc TV has been losing a lot of subscribers. AT&T could pay a part of the debt that amounts $160 billion through the possible sale. However, there are few takers for Direc TV. One of the likely buyers is Dish TV, but it does not have sufficient cash in hand, and the business is just half of that of Direc TV. AT&T can enter into a deal with Dish TV for Direc TV, and the new entity to return the benefits and pay the debt. However, there are impediments in that path.
According to John Stephen, Chief Finance Officer of AT&T, they tried the combination of two satellite TV businesses previously, but it failed. It has faced regulatory obstacles for the deal. However, CFO is not clear about the organizational norms that dented the agreement.
Direc TV mainly focuses on offering on-demand and live shows to the customers through the DirecTV App. It allows up to 5 screens in a session. The DirecTV package comprises EPIX, StarZ, Cinemax, Showtime, and HBO. The customers can watch their favorite sports in bundled packages. Despite all these attractive packages, DirecTV is losing substantial customers.
Previously, AT&T faced an issue when it tried to take over Time Warner Group because of objection from Donald Trump, the US President. It is difficult for the company to get regulatory approvals for any deal under the current administration.