Despite reports earlier last week suggesting that AT&T had plans to spin off DirecTV, now AT&T COO and WarnerMedia Chief John Stankey says that the company doesn’t plan to sell DirecTV. In an interview with the WSJ, Stankey said that “DirecTV is an important part of what we’re going to be doing going forward.”
Where it exactly fits in though has not been entirely clear. It’s been a rough path since AT&T acquired DirecTV for $49 billion in 2015 — as the pay-TV service has seen massive losses. The service peaked in 2016 with 21 million subscribers, but with continuing losses which saw 778,000 premium TV subscribers churn last quarter — the service is left with just 17.9 million subscribers. And it’s not expected to get better, as they’ve already hinted that they will lose over 1 million subscribers in the third quarter.
Stankey is optimistic with the company’s streaming plans going forward. He indicated that despite the low prices for Apple TV+ and Disney+, that HBO Max will be able to command a premium. With 30 million households already paying $15 a month for HBO, AT&T will have to convince subscribers to pay even more to bundle in Warner Bros. library of movies and shows like Friends and The Big Bang Theory.
According to the interview, AT&T is hoping to leverage their pay-TV distributors to help launch the service. This is a similar strategy to HBO, which sells both a direct-to-consumer product called HBO NOW, and through cable companies like Comcast and AT&T’s own satellite unit DirecTV.
The company has been under tremendous pressure since Elliot Management, a $3.2 billion shareholder of AT&T stock, released a letter addressed to AT&T’s board calling out the company’s performance — especially around their DirecTV business.
Last week, CNBC reported that Elliot Management has asked the company to begin a wide search to replace current CEO Randall Stephenson, who is expected to retire next year. While Stephenson has wanted to name John Stankey, WarnerMedia’s CEO and recently named COO of AT&T, his replacement — Elliot Management doesn’t want Stankey, who led the DirecTV acquisition in charge.
This morning, it was reported that if Stankey to leave his role, that Jeff Zucker could take over his role as WarnerMedia CEO. But, Stankey said to the WSJ, that he’s “not looking to find (his) successor right at the moment.”