Lessons from AT&T’s bruising entertainment experience

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Why did AT&T buy, and then sell, DirecTV and Time Warner after only six years? This report looks at AT&T’s decisions, actions and their consequences, and the lessons for others attempting adjacent market moves and M&A.


Format: PDF filePages: 40 pagesCharts: 22Author: Liam MimnaghPublication Date: November 2021

Table of Contents

  • Executive Summary
    • What can others learn from AT&T’s experience?
  • How AT&T entered and exited the media business
    • AT&T enters the satellite market at its peak
    • The beginnings of a bumpy journey in TV
    • Vertical integration strategy: The culture clash
    • AT&T’s telco mindset drives its video strategy
    • HBO MAX performance
  • The financial impact of AT&T’s investments
    • Reversing six years of strategic change in three months
  • Lessons from AT&T’s foray into media

Table of Figures

  • Figure 1: DirecTV NOW subscriptions
  •  Figure 2: AT&T’s own customer facing teams misunderstood the new propositions
  • Figure 3: Timeline of AT&T entertainment propositions
  •  Figure 4: Decline in traditional pay-TV households
  •  Figure 5: Satellite subscribers to Dish and DirecTV 2015-2020
  • Figure 6: DirecTV / U-Verse premium TV subscriptions
  • Figure 7: AT&T video revenues 2014-2020
  • Figure 8: Senior executive turnover at DirecTV
  • Figure 9: Senior executive turnover at Time Warner
  • Figure 10: HBO MAX performance from launch
  • Figure 11: Netflix, Disney, HBO/HBO MAX subscribers, Q3 2021
  • Figure 12: Netflix, Disney, HBO/HBO MAX ARPU, Q3 2021
  • Figure 13: AT&T segment revenue 2017-2020
  • Figure 14: Time Warner / WarnerMedia revenues
  • Figure 15: AT&T loss of transaction value from DirecTV
  • Figure 16: Structure of WarnerMedia spin-off and merger with Discovery
  • Figure 17: AT&T shareholders will own a stake worth US$67bn in the converged WarnerMedia and Discovery
  • Figure 18: AT&T revenue and long-term debt with estimated impact of spin-outs
  • Figure 19: 5-year AT&T, Verizon, T-Mobile, Netflix and Disney share price
  • Figure 20: US operator market share 2014-2020
  • Figure 21: Comparison of Verizon, T-Mobile and AT&T revenues
  • Figure 22: Chronicle of AT&T’s video content propositions

Companies: Amazon, AT&T, Comcast, DISH, Disney, HBO, Netflix, Roku, T-Mobile, Time Warner, Verizon

Keywords: 5G, Advertising, Amazon, ARPU, AT&T TV, AT&T TV NOW, AT&T Watch TV, AVoD, C-band, cable, cable operators, Churn, Comcast, connectivity, cord-cutting, Cord-shaving, cord-shifting, direct-to-consumer, DirectTV, directv, DirecTV NOW, discovery, DISH, Disney, HBO, HBO MAX, M&A, merger, MVPD, Netflix, OTT, Over The Top, pay-TV, Roku, satellite, spin-out, spun off, SVoD, T-Mobile, Time Warner, TV subscriptions, U-Verse, Verizon, WarnerMedia, wholesale partners, wholesale subscribers