Tags: at&t | stephenson | directv | trump

AT&T CEO Stephenson Under Fire for DirecTV Losses, Poor Results

AT&T CEO Stephenson Under Fire for DirecTV Losses, Poor Results
AT&T CEO Randall Stephenson (Win McNamee/Getty Images)

By    |   Monday, 16 September 2019 02:31 PM

AT&T CEO Randall Stephenson has become the target of hedge fund Elliott Management Corp. when the telecom giant posted poor results after its DirecTV acquisition and finds its merger with media giant Time Warner, the owner of CNN, questionable.

President Donald Trump quickly seized on Elliott’s criticisms of AT&T, tweeting last week: “Great news that an activist investor is now involved with AT&T. As the owner of VERY LOW RATINGS @CNN, perhaps they will now put a stop to all of the Fake News emanating from its non-credible ‘anchors.’ Also, I hear that, because of its bad ratings, it is losing a fortune.....”

In June, the President had urged his Twitter followers to boycott AT&T products and services, citing CNN’s “fake news.”

And in a front-page article  this weekend, The Wall Street Journal reported that the retiring Stephenson has come under investor anger for his 2015 acquisition of DirecTV for $49 billion.

At one time, AT&T counted over 26 million subscribers through DirecTV and other paid TV offerings.

The Journal reported that the company now expects to end this year with just 22 million subscribers.

DirecTV is hemorrhaging subscribers. AT&T reported DirecTV lost 544,000 subscribers in Q1 of this year, as customers left the service for less expensive options or due to cord cutting.

In Q2 turned in worse result: close to a million customers quit DirecTV and other premium TV services, largely due to price increases, AT&T said.

Investors have been critical of the telecoms entry into paid television as well as media.

Stephenson had sought to have WarnerMedia CEO John Stankey replace him at the helm of AT&T when he departs next year.

Elliott has criticized the move without “conducting a thorough search” for a new CEO and also questioned AT&T’s recent acquisition of Time Warner for $81 billion.

The Trump administration unsuccessfully tried to block the merger of AT&T with Time Warner.

At the time of the merger litigation, AT&T claimed in a federal court filing that the planned merger "will enable the merged company to reduce prices."

But since the merger and despite its promise to the court, AT&T has raised prices multiple times for DirecTV, DirecTV Now (its streaming service), and U-verse, according to ArsTechnica.

Last week Elliott Management disclosed it held a $3.2 billion stake in AT&T.

“AT&T’s core telecommunications businesses are actually performing well and are well positioned for the future,” Elliott’s letter noted. “Unfortunately, the poor results at (the much smaller) DirecTV and general concern about the Company’s ability to execute have obfuscated this otherwise-strong positioning.”

Elliott Management wants AT&T to sell many of the non-core business it considers to be “distractions,” including DirecTV.

Still, AT&T is bearing down for a  proxy fight – the company is working with Goldman Sachs bankers to mount a defense.

“I don’t think there’s going to be much management change until there’s blood in the street,” said an investor familiar with AT&T’s leadership.

 

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AT&T CEO Randall Stephenson has become the target of hedge fund Elliott Management Corp. when the telecom giant posted poor results after its DirecTV acquisition and finds its merger with media giant Time Warner, the owner of CNN, questionable.
at&t, stephenson, directv, trump
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2019-31-16
Monday, 16 September 2019 02:31 PM
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