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Why may the market have pre-priced the impact of the Trump election challenge



Bloomberg

The second disintegration of AT&T

(Bloomberg) – AT&T Inc. has been called many things in its 135-year history: Ma Bell, monopoly corporation, media corporation. The company originated from the patent rights of phone inventor Alexander Graham Bell, which was the dominant telephone company for much of the 20th century. In fact, it broke down in 1

982 as part of deal with antitrust agencies. But those businesses eventually started to merge, culminating in SBC Communications – one of the so-called Baby Bells – that acquired AT&T in 2005 and took the name. This was followed by a series of deals to turn AT&T into a new giant of television, media and advertising. After an unsuccessful attempt to acquire T-Mobile, the company acquired satellite TV provider DirecTV in 2015 for $ 49 billion, becoming the largest pay TV provider. It bought Time Warner in 2018 for $ 85 billion, making Ma Bell the indispensable parent company of HBO, CNN, Warner Bros. and DC Comics. The carrier has also made smaller transactions, such as the acquisition of AppNexus, an online advertising platform in 2018. And again, AT&T is too big. Stankey has been unsuccessful in protesting the Time Warner deal – but investors and CEO John Stankey of the company itself. AT&T also dropped to No. 3 in the wireless phone business this year, after T-Mobile US Inc. acquires Sprint Corp. The company just launched HBO Max, an attempt to overtake Netflix Inc. and Walt Disney Final CEO, Randall Stephenson, spent most of his 13-year term haunted by deals. He kept a list of potential companies he wanted AT&T to buy, resulting in 43 acquisitions. Now, Stankey has his own to-do list: things he wants to sell. “This will keep us busy for a short period of time.” Critics such as operations investor Elliott Management Corp have urged AT&T to focus on its subscription services and revert to its strategy of large business mergers and acquisitions by divesting deals. acquisitions, including DirecTV. “When you look at what’s working or not working in telecommunications, you’ll see that corporations and empire-building have not been rewarded by the market,” said Todd Lowenstein, equity strategy director. said section of Private Banking at Union Bank. Stankey, who has spent his entire 35-year career at AT&T, may be the one who can hardly break the AT&T acquisition empire. He has ridden a shotgun as a top captain during Stephenson’s accumulated decade. This CEO has been instrumental in creating some of the current problems, and he directly called them out: Last month, he admitted that pay TV providers such as DirecTV could face off. face with years of wire cutting before bottoming out. He said his attack plan is to focus on three key growth areas: wireless – especially 5G – where there is hope for new consumer and business applications; fiber-optic network connection to accommodate increased data traffic; and HBO Max, the streaming future of AT & T’s video ambitions. For new acquisitions, don’t expect much beyond buying opportunities, Stankey said in an interview in September. “Right now, this management team is focused on getting it right and moving distractions go elsewhere, ”he said. “It will keep us busy for a while.” Last month, AT&T received $ 1.1 billion for its stake in the Central European Communications Enterprises. The company sold office buildings and shares in Disney’s streaming service Hulu. The company also netted nearly $ 2 billion from the sale of its phone business in Puerto Rico earlier this month. The company is targeting debt repayment and cutting $ 6 billion in annual expenses, in part through cutting thousands of jobs. for sale or to scale down. The question now is how big the company wants to sell – and who might be interested in buying.DirecTVT The biggest priority is DirecTV and other AT&T pay-TV operations, which already collect attract customers. AT&T has been searching for options for DirecTV for over a year, but finding a single buyer for the entire business seems impossible. The association with Dish Network Corp, the nation’s other satellite TV provider, is one scenario. But dropping the industry down to a single company will attract antitrust scrutiny, especially because rural customers have few other options. A proposed combination of these two businesses was canceled by the Federal Communications Commission and the Justice Department in 2002, where AT&T is instead trying to sell shares – and possibly control of the venture. industry – for outside investors. A move could reduce AT&T performance. But the ice sheet is melting fast: Pay TV revenue fell by more than $ 1 billion, or 10%, in the third quarter. Global management company Rollo discussed such a transaction. And Bloomberg News reported this week that former Citigroup Inc. rainmaker Michael Klein could execute a deal through white-check firm Churchill Capital Corp. His IV. Ideally, an agreement would allow AT&T to remove DirecTV from its books while maintaining access to some of its cash flows. However, a deal is expected to value DirecTV just around $ 15 billion when the bid is finally accepted next month. That’s less than a third of the price AT&T paid five years ago. DirecTV’s Latin American business of OntarioAT&T has had some of the same problems as that of the US, only with an even more erratic political context. The 2015 DirecTV acquisition includes satellite businesses in South America and the Caribbean – an entity that has been renamed Vrio. The unit’s biggest problem is the pay-TV business in Venezuela. During times of political turmoil in the country, the service was shut down after entangled in US and local government restrictions. Then, after reducing the size and price of the offer, AT&T abandoned the move. Over the past two years, the declining value of the satellite TV business has made the prospect of dismantling the business increasingly blurred. Warner Bros. Interactive Entertainment Unlike some of its businesses, AT & T’s video games division will be a highly regarded asset for some potential. buyer. The company is said to have explored a sale of operations, estimated to be worth $ 4 billion. However, AT&T recently pulled the business out of the list of valuables they were willing to part with. But with the gaming industry booming during the pandemic – and AT&T facing the complications of wanting to retain licensing rights – the company may have decided that the division is worth keeping for its own. me. The animated video service is the first step in AT & T’s giant pivot to sixth media. many years ago. Crunchyroll was acquired through the company’s newly formed joint venture with the Chernin Group, known as Otter Media. The name is derived from the OTT acronym, for content distributed over the internet “on top” of a traditional platform. Since then, just “streaming” has become the more common term. AT&T acquired the remaining stake in Otter Media from the Chernin Group in 2018. Recently, the telecom giant has acquired second thought. Last week, the Nikkei business daily reported that Sony Corp. is in final negotiations to acquire the service in a deal worth nearly $ 1 billion. CNNCNN is one of the controversial businesses that AT&T acquired when it took over WarnerMedia in 2018, with its chairman regularly attacking cable networks on social media. It is also a source of takeover speculation, with Jeff Bezos seen as a potential buyer. But Stankey said in September that CNN is one of the parts of the WarnerMedia structure that is “more closely linked together than before.” In other words, selling it seems less likely. XandrAT & T has high hopes for the AppNexus digital ad unit it acquired for $ 1.6 billion in 2018. Named after Alexander Graham Bell’s nod, Xandr will become a network advertising that all pay TV providers can use. Advertising industry veteran Brian Lesser was hired to run the operations, and Stephenson told investors the business would bring in $ 2 billion in new revenue by using customer data to deliver advertisements. targeted fox. There’s less left, and it’s up for sale now when WarnerMedia’s new director, Jason Kilar put in another advertising team. Mariners: Although live sport is still the closest thing to TVs these days, owning an RSN is becoming increasingly a headache. Sports federations have been searching for ever-increasing amounts to get rights to their game and subscribers are no longer as reliable as they once were. Sinclair Broadcast Group Inc. just dropped their RSN number by $ 4.23 billion, admitting they paid too much for cable channels they bought last year. Seeking cash to pay off debts, AT&T was hoping to sell its RSN and get cash. Their estimated value of 1 billion dollars. The company searched for a bid last year, but one buyer did not come to fruition. This year, with sports still trying to recover from Covid-19, sales seem even less. year 2013. Despite its attempt to explore opportunities beyond its wireless service, the timing and pattern may have been wrong. Homeowners have moved away from expensive security services and bought DIY systems or products like Ring from Amazon.com Inc. or Nest from Alphabet Inc. Four years into the joint venture, AT&T began to find a way out. AT&T Mexico Stephenson crossed the border and ended a decades-long friendship with his once-teacher Carlos Slim by becoming a direct competitor to a mobile customer in Mexico. AT&T bought wireless carrier Grupo Iusacell SA for $ 2.5 billion in 2015 and expanded the service to cover most of Mexico in 2018. But Covid-19, exchange rates and unification value of rival America Movil in Mexico has made the investment unprofitable and difficult to justify. “It will keep us busy for a while.” So what is Stankey doing now? Colby Synesael, an analyst at Cowen, said holding to the top dollar for some of these assets may not be the right approach. Stankey just needs to “take out Band-Aid and go on,” Synesael said. In other words, take what he can get. “I think he has become clear that he needs to do it. And he does it as soon as possible, ”said Synesael. “He doesn’t want to spend his entire CEO tenure undo what he and Randall did in the past. Get the job done now so he can focus on other initiatives. ”For more articles like these, please visit us at bloomberg.com Sign up now to stay on top with the most trusted source of business news. © 2020 Bloomberg LP


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