AT&T Could Take a Massive Hit on DirecTV Sale

When AT&T (NYSE: T) announced that it would acquire DirecTV in 2014, it was initially billed as a way to create "a unique new competitor with unprecedented capabilities in mobility, video and broadband services." However, that acquisition hasn't played out well. AT&T spent $67.1 billion in total, including absorbing DirecTV's net debt load, while the transaction pegged DirecTV's equity value at $48.5 billion.

The purchase was poorly timed, as cord-cutting has continued unabated in the years since. AT&T has been bleeding out video customers, including 4.5 million over the past year. A little over a year ago, activist investor Elliott Management quietly accumulated a stake, criticized the DirecTV acquisition for occurring "at the absolute peak of the linear TV market," and called for AT&T to divest the botched purchase in order to eliminate distractions and focus on the core business.

Image source: AT&T.

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Source Fool.com