By Karl Bode
In AT&T executives’ heads, the 2015, $67 billion acquisition of DirecTV and the 2018 $86 billion acquisition of Time Warner were supposed to be the cornerstones of the company’s efforts to dominate video and online video advertising. Instead, the megadeals made AT&T possibly one of the most heavily indebted companies in the world. To recoup that debt, AT&T quickly ramped up its efforts to nickel-and-dime users at every opportunity, from bogus new wireless fees to price hikes on both its streaming and traditional video services.
This, in turn, wound up driving a customer exodus. In fact, AT&T has lost more than 8 million TV subscribers in just the last three years alone. Not exactly the kind of sector domination the company had in mind.
Last year, “activist” investors at Elliott Management began making a stink about AT&T’s obsession with mindless merger mania. Not that it hurt consumers or misdirected funds away from network investment, mind you, just that the debt was dragging down the firm’s $3.2 billion investment in AT&T stock. In response, AT&T forced its CEO to “retire,” and the company, at Elliott’s behest, greatly accelerated mass employee firings and customer service offshoring. AT&T’s since fired more than 42,000 employees in just the last few years, despite a $42 billion Trump tax break AT&T promised would result in “thousands of new, high paying jobs,” and billions more in regulator favors ranging from the death of broadband privacy rules to the dismantling of net neutrality.
Now it appears the moves were enough to give Elliott what it wanted. After raising a massive stink throughout much of 2019, the company this week quietly offloaded its entire stake in AT&T:
“The New York-based hedge fund liquidated its investment when it sold 5 million shares during the quarter that ended Sept. 30. It had first bought into the stock during the third quarter 2019, according to another filing.”
Elliott wasn’t entirely wrong. AT&T did fixate so much on merger mania it lost the forest for the trees and neglected its core focus: building and running networks. It also bungled its entry into the video streaming space with a befuddling array of different branding that confused even AT&T employees. It spent $150 billion to dominate a sector it’s now barely making a dent in. Were I an investor, employee, or customer, I’d probably be pissed too.
The problem, of course, is that, as usual, it’s the employees and consumers who actually pay the price for managerial incompetence. AT&T has a long history of cutting corners when it comes to network investment, then holding regulators and lawmakers hostage with empty promises that “X” (deregulation, merger approval, subsidies, tax breaks) will finally get AT&T to meaningfully invest into its own network. But these serious fiber upgrades never really happen because entrenched telecom monopolies, protected from accountability via regulatory capture, no competition, and their cozy relationships with U.S. intelligence, are, in effect, a perpetual, taxpayer subsidized con.
A con where, time and time and time again, executives and investors wind up somewhere sipping mojitos on a yacht, while customers and employees pick up the tab.