AT&T Shouldn't Have Bought DirecTV: CEO Stankey

June 11, 2021 by Matt Daneman|Mergers & Acquisitions

AT&T in hindsight likely wouldn't have bought DirecTV because pay-TV universe subscriber losses were steeper than expected when the carrier started pursuing the deal, CEO John Stankey said Thursday during an Economic Club talk. He said DirecTV didn't generate the value long term that was expected. He said it's "entirely possible" the spinoff of the company's video business (see our report here]) could recapture some lost value, and said the WarnerMedia/Discovery spinoff and combination (see 2105160003) should generate big returns for shareholders, including him. "I intend to leave all my equity in that new business," Stankey said. While the deal goes through regulatory review, WarnerMedia is "full steam ahead" with initiatives such as launch of an ad-supported HBO Max tier this month and work on a CNN streaming product, Stankey said. The $65 billion for broadband the administration and Senate Republicans agreed on (see 2105270072) before talks collapsed potentially "knocks ... out" the rural digital divide problem, though that access likely will use a mix of technologies including wireless and satellite, along with fiber, and won't be as robust as will be found in less-rural areas, Stankey said. Left unaddressed is the affordability issue, which will require about $4 billion annually in subsidies, he said. That money could come from congressional appropriations or from excise or use taxes, he said. Asked about AT&T's $23 billion in 2021 C-band payments, he said it "will not be the last investment we make in spectrum" to meet increasing wireless data demands. Stankey said occupancy at AT&T's Dallas headquarters was about 20% a month ago, and is growing. He said the company will be in its "new hybrid mode" by summer's end, with all employees in one of three categories: in the office a couple of days a month, in the office a couple of days a week, and daily. He said a high percentage of AT&T workers would be hybrid: So far, the company is urging but not requiring worker vaccinations.