Snippet: What Did It Cost? Everything ☍

Shared on March 3, 2021

Karl Bode for The Verge:

Last week, AT&T announced it would be spinning off its TV business — including DirecTV, AT&T TV, and U-verse — in a deal it claimed would greatly benefit the company’s customers, employees, and shareholders. The deal provides AT&T with a $7.8 billion cash infusion to pay down debt and recent wireless spectrum purchases, and a 70 percent stake in the “new” DirecTV. But it also values the entire operation at around $16.25 billion, a massive loss from the $67 billion AT&T paid just a few years earlier for just DirecTV alone. […]

The end result of AT&T’s ambition wasn’t entirely fruitless: HBO Max, the latest in a long line of attempted streaming TV brand refreshes, could still challenge other rising streaming services like Disney Plus or Comcast’s Peacock. But however successful HBO Max winds up being, it’s a product that shouldn’t have cost $200 billion and 55,000 jobs to create.

After last week’s news, I was thinking about some of the things AT&T has had happen in the past 20ish years, and it seems it’s a cycle of bad decisions mixed with debt and little innovation. While the current company is mostly the former SBC under the surface (SBC bought and took the AT&T name in 2005), the idea of loading up the debt and not properly reading trends is nothing new. They overpaid for DirecTV when it was already headed towards a decline, squandered DirecTV Now with price hikes and bugginess years later, and even made mistakes in wireless. Trying to buy T-Mobile in 2011 failed and they had to pay a breakup fee, which arguably gave T-Mobile a kickstart to overtake Sprint, then buy Sprint, and now overtake AT&T in customers.

While ancient history, the pre-SBC AT&T wasn’t much better. After buying a few regional cable systems, they were the largest cable provider in the United States. Panicking to pay down debt, the entire operation of “AT&T Broadband” was spun off and later sold to a much-smaller Comcast, which helped create the Comcast we know today. Another spun-off division, AT&T Wireless, was known to have poor service in many areas and the newly-mandated number portability was the final nail in its coffin. The division was sold to rival Cingular Wireless and mostly dismantled. The AT&T name was brought back to replace Cingular a few years later due to both of Cingular’s owners merging.

I often think about what would have happened if something went differently. T-Mobile and Comcast would not have become as large as they are, Cingular and Sprint would still exist, and NBCUniversal and Time Warner would have different owners.

HBO Max being successful is a good thing, but I can’t help but wonder if it was worth it.

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