AT&T bought the service in a deal that closed in 2016, for a purchase price of $48.5 billion, in addition to the assumption of $18.6 billion in debt. DirecTV has been losing subscribers at an alarming clip, and bankers are reportedly pushing for AT&T to reduce its debt load. A new round of stories in recent weeks had AT&T looking to shed at least part of its stake in DirecTV, possibly to a private equity firm.
The company’s CEO, John Stankey, addressed the DirecTV question and much more Tuesday at the Goldman Sachs Communacopia conference, when he was interviewed by John Waldron, Goldman’s President and COO.
Waldron asked Stankey how important it is for AT&T to “continue to own that direct customer relationship as a pay TV provider.”
“I think having customer relationships is incredibly important moving forward and it’s something that is I think about strategically positioning the business,” Stankey said. “And one reason why this dynamic of connectivity and entertainment is important together is, I think, it’s so critically important that the company have a relationship with most customers. How we’ve traditionally defined things like share is no longer sufficient and we can be very successful having 25%, 28% share in a particular market we served and run great businesses.”
But, Stankey strongly implied that the traditional model is not going to be AT&T’s going forward.
“But moving forward, I don’t know that that’s going to be the basis of success. And so pay TV was a great business for many decades. Having to share that market was attractive from a cash flow and a franchise perspective. We really need products and services that maybe have different characterization—characterizations of the buy in. Hopefully a little bit lower price point that can be in more households and I think that’s why HBO Max is so attractive… And so, pay TV is an important product to us. We’ve managed, what I would call, more mature and legacy products, very effectively over the history of our business. That customer franchise still has value to us. We want to manage it carefully. We want to be thoughtful about that.”
Stankey did not mention DirecTV by name in the interview, nor did he state that the company plans to sell it.
The CEO also discussed the launch of HBO Max.
“We’re pushing really hard to build new software-driven entertainment products, HBO Max is at the forefront of that. We’re really pleased with our progress around that,” Stankey said, while adding that the rollout of the service “is going to be a multiyear effort.” He added later that “couldn’t be more pleased” about where the company is with HBO Max.
Stankey did not directly address the ongoing dispute between AT&T and Roku and Amazon about carriage of HBO Max.
Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.