Moody’s Investors Service (Moody’s) said that following activist investor Elliott Management Corporation’s disclosure of its stake in AT&T Inc. (AT&T) and its criticism of AT&T’s past M&A strategies, there are media reports stating that AT&T is exploring divesting its DIRECTV business, which would be credit positive if accompanied by material leverage reduction. Moody’s believes that the secular pressure on DIRECTV’s satellite pay TV business, which has resulted in subscriber erosion, is a headwind unlikely to abate and could be a distraction for management while it should be focused on pressing its 5G wireless agenda, turning around its stagnating consumer base and investing in the transition of WarnerMedia’s media networks from bundled linear pay-TV to Direct-to-consumer on-demand platform(s).
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